House of Commons European Scrutiny Committee considers impact on UK of proposed EU financial services reform agenda

Regulatory Updates | 25/11/20

The House of Commons European Scrutiny Committee has published the Twenty-ninth Report of Session 2019-21, which includes the Committee’s conclusions following its consideration of the EU financial services reform agenda. The Committee highlights in particular that:

• the EU’s legislative efforts to revise its financial services rulebook could still have regulatory, economic and fiscal implications for the UK;
• the fact that the European Commission’s policy papers do not make specific reference to impact on non-EU countries markets is not a reason to presume that no such impacts will occur, especially given the EU capital markets union agenda and its desire to lessen the dependency of the European economy on services and market infrastructure provided from London; and
• the scope of the EU’s work programme for financial services and uncertainty around its possible impact on the UK is such that Parliament will need to be selective in prioritising its focus on upcoming EU proposals.

The Committee will continue to monitor legislative developments at EU-level, and continue to report them where sufficiently significant. In particular, the European Commission is due to publish a policy paper on the EU’s “financial sovereignty” in December 2020, which may flesh out further how it intends to reduce the EU’s reliance on overseas financial services providers. Similarly, it is preparing a new Sustainable Finance Strategy which is likely to overlap with the Government’s ‘green finance’ agenda.