On 10 May, Prince Charles stood in for the Queen at the House of Lords to give a speech outlining her government’s legislative priorities, listing the bills it plans to bring before MPs and peers. Let’s take a look at how the Queen’s Speech will impact the financial technology community.
New legislation aims to ‘strengthen the UK’s financial services industry’ and ensure that it ‘continues to act in the interest of all people and communities’.
The Financial Services and Markets Bill
This Bill delivers on the vision for the financial services sector, building on the Financial Services Act 2021, which was the first step in amending the UK’s regulatory regime outside of the EU. Key elements include:
- Revoking retained EU law on financial services and replacing it with an approach to regulation that is designed for the UK. This includes the Solvency II legislation governing the regulation of insurers, which the government has committed to reform.
- Updating the objectives of the financial services regulators to ensure a greater focus on growth and international competitiveness.
- Reforming the rules that regulate the UK’s capital markets, the engine of the UK economy, to promote investment.
- Ensuring that people across the UK continue to be able to access their own cash with ease.
- Introducing additional protections for those investing or using financial products, and to make it safer and support the victims of scams.
Dr. Henry Balani, global head of industry and regulatory affairs for know your customer (KYC) automation platform provider, Encompass Corporation says: “The proposed Financial Services and Markets Bill should be seen as a welcome step forward. As well as working to protect consumers and the country’s cash infrastructure, its aim is to establish a coherent, agile and internationally respected approach to financial services regulation for the UK, ensuring all key players adhere to the highest standards and are better equipped to tackle the evolving financial crime landscape.
“This will be crucial to illustrating a more targeted approach to money laundering and fraud – which is on a sharp increase – whilst also enabling more meaningful growth of the entire financial sector, ultimately, maintaining and enhancing the UK’s position as a global financial services leader.
Alex Richter, head of compliance SaaS firm Passfort, said: “The plan set out by the government in the Queen’s Speech to ‘eradicate cash deserts’ and protect those who rely on cash is a commendable action. it is essential not to disenfranchise those who rely on notes and coins.
“The growth of the digital economy has brought a multitude of benefits for businesses and individuals, but it is too easy for the disadvantaged to become financially excluded. In the UK, it’s estimated that 16 per cent of over 18s don’t own a smartphone, and according to The Office for National Statistics, around 2.7 million UK adults don’t have access to the internet.
“Primarily using cash does not make a person a criminal, and, therefore they should not be punished for it. It will be those already most disadvantaged members of society who would suffer as a result, those who lack even the basic identity information necessary for KYC checks.
“The Queen’s speech announcement will allow more breathing space for people and time to enable more people to be supported into joining the digital economy. It is critical that more is done to encourage new customers to have access to financial products and services before we can even consider phasing out cash as a means of transaction.”
Marc Terry, international managing director at UK ATM network Cardtronics, stated: “The inclusion of access to cash as part of the Financial Services Bill is a huge step forward in the fight for protecting the public’s access to cash.
“This is an essential opportunity for the government to ensure the UK’s cash infrastructure is sustainable and secure, whilst also safeguarding the public’s right to choose how they want to pay. The next focus should be to reinforce the importance of ATMs, including deposit-taking and recycling machines, as part of the solution.”
Data Reform Bill
The UK’s data protection regime is to be reformed through the introduction of the Data Reform Bill. This follows the Government’s consultation paper on reforms to the UK’s data protection regime last September.
It aims to create a new ‘pro-growth and trusted UK data protection framework that reduces burdens on businesses, boosts the economy, helps scientists to innovate and improves the lives of people in the UK’.
The bill is also intended to modernise the Information Commissioner’s Office (ICO) and increase industry participation in ‘smart data schemes’ designed to give citizens and small businesses more control of their data.
Charlotte Crosswell, chair and trustee of the Open Banking Implementation Entity (OBIE), said: “The inclusion of Smart Data legislation in the Queen’s Speech brings us one step closer to expanding the benefits of open banking to other sectors of the economy, including energy, telecommunications, and pensions. It will put consumers and small businesses in control of their data and drive much needed innovation and competition.
“The UK is a world leader in open banking, not by accident but by design. The Competition and Markets Authority mandated participation of the largest banks and building societies, creating an ecosystem that allowed fintechs to strive and deliver valuable products to market. Smart Data legislation will allow the government and regulators to mandate participation in other sectors.
“Data can unlock a whole suite of benefits for consumers and small businesses and can be mobilised to combat the increase in cost of living through better access to credit, increased competition between incumbents and supporting new market entrants, and better management of household and company bills.”
Harry Weber-Brown, CEO, The Investing and Saving Alliance (TISA) Digital, said: “It is really encouraging to see the inclusion of smart data in this year’s Queen’s Speech. Smart data, and open finance will revolutionise the way we access financial services, and we are pleased that the Government is determined to support this.”
“We believe the time is right to look forward and move beyond open banking by incorporating open savings, investments, and pensions (OSIP) in our ambition to provide broad digital access to the full scope of financial services. With the consumers request, OSIP will enable fintechs and other financial institutions to access savings, investment, and pensions data via APIs (application programming interfaces), enabling data sharing in a secure environment, utilising data standards and optimising the user experience.
The Economic Crime and Corporate Transparency Bill
This Bill will tackle economic crime, including fraud and money laundering. It will:
- Introduce identity verification for people who manage, own and control companies and other UK registered entities.
- Create powers to more quickly and easily seize and recover crypto assets, which are the principal medium used for ransomware.
- Enabling businesses in the financial sector to share information more effectively to prevent and detect economic crime.
Alan Vey, CEO and co-founder of the Aventus Network, a blockchain for business platform, said: “It’s reassuring to see cryptoassets being featured in the Queen’s Speech to Parliament, placing them firmly into the legislative and regulatory agenda. However, it is important to note that there is more to the industry than cryptoassets alone – the wider blockchain sector can cover a far wider range of applications for the underlying crypto technology than value holding tokens, like Bitcoin. Blockchain is already being used in supply chain logistics, event ticketing, digital art, property and much more.
“As the Government continues to look into the crypto industry, the scope of their work must expand to provide the regulatory and legislative clarity to this emerging sector for its sustained growth and maturation. They must work closely with the blockchain experts as they look to identify the major pinch points and create legislation that keeps the industry accountable while not stifling innovation.”
Meanwhile, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The UK government used the Queen’s Speech to demonstrate it sees opportunities within the crypto and blockchain eco-system for innovation, but that it’s intent on the safe adoption of crypto currencies.
“Just how that will be achieved is far from clear, but with crypto fans losing billions in this latest sell off, clamour is likely to intensify for a fresh set to rules, particularly for stablecoins, to be drawn up.”
Online Safety Bill
The Online Safety Bill delivers the government’s manifesto commitment to make the UK the safest place in the world to be online while defending free expression. The Bill has been strengthened and clarified since it was published in draft in May 2021. It aims to minimise the likelihood of fraudulent adverts being published to make it harder for fraudsters to advertise scams online.
Myron Jobson, senior personal finance analyst, interactive investor, said: “The online safety bill will continue to proceed through parliament. The hope is the Online Safety Bill will go some way to plug the flood of financial scams that have mushroomed during the pandemic or offer some protection against harmful content. However, the onus still falls on individuals to avoid financial harm – there is no getting around it.”