Major UK review of financial services regulation announced

Hammond outlined his plans for the review in a speech delivered to City executives on Thursday last week.

"This review will deliver a regulatory system that continues to enable, rather than stifle, innovation, that protects consumers, maintains the highest possible standards, is proportionate and policed by independent regulators, and that recognises that the EU will continue to be one of our major trading partners, even as it lays the groundwork for the more global nature of our future financial services industry," Hammond said.

The first stage of the review will be aimed at improving "coordination" between the UK's various regulators of financial services, he said. A meeting of the regulators is scheduled for later this summer before the Treasury then opens a call for evidence.

In his Mansion House dinner speech, Hammond further announced that a separate review, aimed at ensuring payments regulation and infrastructure supports innovative new services in the market, is to be conducted in the UK.

"I can announce this evening a Treasury-led review of the payments landscape bringing together policymakers and regulators to make sure that our regulation and infrastructure keeps pace with the dizzying array of new payments models," Hammond said.

Hammond described the fintech innovation occurring in the sector as "unprecedented" and said UK policy and regulation must change to ensure the country remains a leader in financial services markets amidst this disruption.

He said: "To remain a dominant player we in the UK must do what London’s markets have always done: evolve. Refuse to stand still; reject the notion of the status quo; embrace change, disruption and challenge. Adopt, adapt and synergise enthusiastically and energetically. Radiate the energy and dynamism which distinguishes a real hub of innovation from its sterile imitators."

Hammond said the government would work with the Financial Conduct Authority (FCA) to give businesses and consumers "power over all of their financial data" in a new world of 'open finance'. This would build on the UK's existing open banking initiative and ensure SMEs "have access to financial tools hitherto only accessible to larger corporates", he said.

Earlier this month the FCA set out plans to publish a 'call for input' later this year on 'open finance', in which it said it will "look at how the principles of open banking, such as those relating to data sharing, can be applied across financial services".