The Chancellor announces reforms to UK Financial Services

By Liam Edwards and Alex Gillespie

On 9 December 2022, Jeremy Hunt, the Chancellor of the Exchequer, announced a suite of reforms and other proposals for the UK financial services sector, collectively titled ‘the Edinburgh Reforms’. The Chancellor’s full statement is available here. This follows shortly after the Autumn Statement, in which the Chancellor identified financial services as a key growth sector for the UK.

The government expects the Edinburgh Reforms to facilitate a transition to an “open, sustainable, and technologically advanced financial services sector” alongside other significant reforms such as the government's reform agenda set out in the Financial Services and Markets Bill.

Some of the proposals set out under the Edinburgh Reforms are as follows:

A competitive marketplace promoting effective use of capital

• overhauling the UK prospectus regime;
• repealing the Packaged Retail and Insurance-based Investments Products (PRIIPs) regime and consulting on new retail disclosure requirements;
• publication of a plan for the repeal and reform of retained EU law, using the powers contained in the FSM Bill;
• repealing the EU ELTIF regulation to make way for the UK Long-Term Asset Fund (LTAF);
• committing to a review of the Senior Managers & Certification Regime (SMCR); 
• consulting on reforming the VAT treatment of fund management;
• consulting in early 2023 on issuing new guidance on Local Government Pension Scheme asset pooling; 
• improving the tax rules for Real Estate Investment Trusts from April 2023;

A world leader in sustainable finance

• publishing an updated Green Finance Strategy in early 2023;
• consulting in Q1 2023 on bringing ESG ratings providers into the regulatory perimeter;

A sector at the forefront of technology and innovation

• consulting on a UK retail central bank digital currency alongside the Bank of England in the coming weeks;
• implementing a Financial Market Infrastructure Sandbox in 2023; and

Delivering for consumers & businesses

• consulting on Consumer Credit Act Reform.

Supplementing the Edinburgh Reforms is a set of thirteen papers that include consultation outcomes, policy papers, and government correspondence, providing further detail on some of the Chancellor’s proposals. This includes five newly announced consultations.

A full list of the proposals as well as the supporting documentation can be found here. 

For further UK financial services regulatory updates, please visit the Burges Salmon blog.