This speech was originally posted on the UK Financial Conduct Authority’s website. This is the text of the speech as drafted, which may differ from the delivered version.
In his first speech since Brexit, John Griffith-Jones, Chairman, FCA told attendees at TheCityUK Annual Conference that financial institutions should start considering alternative plans of how to proceed in light of the vote. Griffith-Jones also predicted that the industry will see more financial regulation around conduct and on capital. See below for the full speech.
Thank you for asking me to speak this morning. I was asked many months ago to speak on global regulation in the post-crisis era. It did not occur to me to ask which one. No matter, I have been an enthusiastic supporter of TheCityUK ever since it was set up. It was born of a need for the financial sector in the UK to show some collective leadership at a difficult time following the 2007/8 crisis. It will need to show that leadership again as we come to grips with the consequences of last week’s vote. The importance of this is obvious. London is a successful financial hub for not only the UK, but also Europe and throughout the world. These are TheCityUK’s own statistics and therefore well known to you.
The UK sector:
- produces 12% of the total economic output
- contributes £66bn in taxes
- generates a trade surplus of £72bn
- has global wholesale market leading positions, particularly in FX, derivatives, and catastrophe insurance through Lloyd’s
In addition, foreign companies have invested around £100bn into UK financial services since 2007.
And from a people perspective, the industry employs over 2.2 million people, many of whom work outside of London, meaning the benefits are spread far and wide.
There is, of course, just now inevitable uncertainty about the future shape of our relationship with the European Union (EU). It is important that we do not lose our focus on ensuring everything continues to work day-to-day. But it is also right that careful consideration is given to the future and here TheCityUK has a key role to play.
It is not for the Financial Conduct Authority (FCA) to tell TheCityUK, or its membership, how to fulfil its role, but nor is it our job to hide rather than to help. Our roles are different, and we will not always align, but at this important moment in the UK’s history we should seek to work together wherever we can, bearing in mind our strategic objective to ensure that markets work well. In that spirit, I can perhaps use this opportunity to reflect on some things that we, and other global regulators, have got right in the past that are prerequisites for the UK financial services sector continuing to prosper in the new landscape.
Please do not take my remarks to reflect in any way settled views, never mind FCA consensus ones, they are more in the nature of rhetorical questions, needing thoughtful and thought-through answers over time rather than knee jerk opinions.
And I shall, as requested, focus on global rather than domestic aspects, and therefore on wholesale rather than retail, but note in passing that the two are not unconnected.
Let me pose 3 questions:
- How does the industry set about thinking through in short order what its strategy is in the post crisis, post Brexit era?
- What can we regulators learn from the past about successful regulatory policy, and its inter connectedness with other global authorities and initiatives?
- How important will ‘conduct’ be in the future?
Starting with strategy, I have no doubt that each of your members is already hard at work on their own strategic plan. But over and above that, I suggest there is a need for an industry led ‘collective’ strategy view to emerge. In the run up to the vote there was much written about various other models: Norway, Switzerland, Canada, World Trade Organisation, and several more besides. As is well known, these include varying degrees of access to the single market combined with varying obligations.
Click here for the full speech on the UK FCA’s website.
