In a word: Delays.
It is less than 24 hours since Boris Johnson announced his resignation as leader of the Conservative Party, triggering a leadership contest that will ultimately decide on a new UK Prime Minister.
Much is still unknown about the days and weeks ahead, not least the exact timeline on which that leadership contest will be held.
Regardless of the outcome, it is almost certain that a new PM, Chancellor and Cabinet of Ministers will be in place by the end of 2022—each with their own set of new priorities and a new direction for the UK.
At the same time, there are a host of fintech policies currently working their way through the halls of Westminster and across the desks of regulators at the FCA, which now face an uncertain future, from crypto regulation to the future of open finance.
"It's far too early for hot takes on what Boris's departure means for the long-term fintech strategy in the UK,” Charlie Mercer, head of economic policy at Coadec told AltFi.
“In the short term, however, it is possible that the political turmoil could delay some of the important work in flight, like open finance, consumer credit reform and cryptocurrency regulation.”
“It is also important to specifically acknowledge the contribution of John Glen, the longest-ever serving City Minister. It will be vital that his successor continues to emphasise the importance of Fintech innovation to the UK economy."
So what policies will potentially face some amount of disruption? There are three key ones:
First announced nearly 18 months ago at the start of 2021, the Government has been marching towards regulating the buy now, pay later sector.
Yet, despite an initial consultation by The Treasury and a set of proposals outlined just last month, we’re still awaiting the launch of a second consultation by the FCA which only then would be followed by new legislation.
While the process has been dragging along for quite some time, plans to regulate BNPL are both fairly developed and broadly accepted by most politicians, putting the likelihood on delay rather than being derailed entirely.
Things get murkier for open finance and ‘smart data’—lingo introduced in the Queen’s Speech only a few months ago.
While some progress has been made with the Joint Regulatory Oversight Committee (JROC) established to mull over the future of the Open Banking Implementation Entity (OBIE)... significant work has yet to be done around the format open finance will take in the UK.
Legislation is still needed but, before that and just as importantly, a political champion is needed. Ideally, a new Chancellor and team at the Treasury would push forward the policy work that outlines what data will be included and how it will be shared.
John Glen MP, the former city minister and economic secretary to the Treasury, and former Chancellor Rishi Sunak were previously those champions.
The big question now is who will fill their boots, and what will their vision of open finance be?
Finally, Glen had made some very bold promises that the Government would be embracing crypto, with progressive regulation to unlock the UK as a crypto powerhouse.
In a speech at Innovate Finance’s Global Summit in April he stated “we see enormous potential in crypto.”
“I can confirm that will be legislating to bring certain stablecoins into our payments framework creating the conditions for sustainable issuers and service providers.”
Those promises are now unlikely to be delivered, and with crypto remaining highly controversial among policymakers and token prices tumbling in recent weeks… it may be a while yet, if ever, before the UK becomes the crypto-friendly jurisdiction that Glen had hoped.
24 March 2023
24 March 2023
24 March 2023
27 March 2023
23 March 2023