The Confederation of British Industry is calling for a tax and regulation revamp to help financial services firms deal with the challenges and opportunities presented by a rapidly changing technological landscape.
With over 1.1 million people working in the industry across every region of the UK, the financial sector contributes 11% of total Government tax receipts. But if the sector is to thrive in a new era of technological innovation, it needs a helping hand from Government and regulators, says the business lobby group.
Underscoring the sentiments is a recognition that the weight of the regulatory burden is hampering the nation's biggest banks as they strive to keep pace with niche interlopers and the technological firepower of Big tech companies.
Flora Hamilton, CBI head of financial services says: "The financial services sector is one of the cornerstones of the UK’s economy - when it is firing on all cylinders, everyone benefits. But the challenges and opportunities presented by the rapid pace, and tremendous scale, of technological change come in equal measures for financial services firms. To fully embrace this change, firms are clear that they need the right regulatory and tax framework in which to operate, so they can innovate and grow."
Among other proposals, the UK’s largest business group is suggesting:
- New mechanisms, such as a new Treasury Select Committee sub-committee for financial services, to scrutinise regulations and taxes that put customers first
- Strengthening engagement with the Financial Stability Board and more international regulatory coherence to support investment and innovation
- A cross-sector financial services technology “hub”, supported by the Treasury and Financial Conduct Authority, to share best practice, knowledge and latest technologies.
Says Hamilton: “Putting customers at the heart of regulatory changes, ensuring the UK works hand in hand with the global financial services industry to stay a strong voice at the forefront of international regulatory and taxation policy, and driving innovation at every turn are all ways the sector can become fit for purpose for the fourth industrial revolution."
Separately, UK chancellor Phillip Hammond will be banging the drum for Britain as the "natural home for fintech" at the IMF annual meeting in Bali. He will tell fellow finance ministers that he wants Britain to lead global efforts to design a regulatory approach to cryptoassets and distributed ledger technology, building on the work of the UK’s crypto taskforce.