A report by the Confederation of British Industry (CBI) has revealed that tax and regulation revamp will make financial services thrive in tech revolution.
The report noted that a fresh regulatory and tax approach will help the financial services sector deal with the challenges and opportunities posed by a rapidly changing technological landscape.
With more than 1.1 million people working in the industry across every region of the UK, the financial sector contributes 11% of total Government tax receipts.
The CBI said if the sector is to thrive in a new era of technological innovation, it requires support from Government and a fresh regulatory and tax approach.
Products and services from the sector, ranging from insurance to payments, have also been major drivers of innovation and economic growth.
CBI financial services head Flora Hamilton said: “The financial services sector is one of the cornerstones of the UK’s economy – when it is firing on all cylinders, everyone benefits. From high street banks to cutting edge digital payment firms, it helps businesses to grow across the UK, is a key catalyst for innovation in the economy, and drives productivity. And that’s not to mention the more than a million jobs it creates, and the taxes it pays – half of the NHS budget last year.
“But the challenges and opportunities presented by the rapid pace, and tremendous scale, of technological change come in equal measures for financial services firms. To fully embrace this change, firms are clear that they need the right regulatory and tax framework in which to operate, so they can innovate and grow.”
Currently, the sector is facing challenges and opportunities of technological change, shifting tax and regulatory expectations along with new risks from cybersecurity.
The industry body has proposed changes to regulations which include the establishment of new mechanisms such as a new treasury select committee sub-committee for financial services, to scrutinize regulations and taxes.
It includes strengthening engagement with the financial stability board and to have more international regulatory coherence to support investment and innovation.
It also seek for the establishment of a cross-sector financial services technology ‘hub’, supported by the Treasury and Financial Conduct Authority, to share best practice, knowledge and latest technologies.
Hamilton continued saying: “Putting customers at the heart of regulatory changes, ensuring the UK works hand in hand with the global financial services industry to stay a strong voice at the forefront of international regulatory and taxation policy, and driving innovation at every turn are all ways the sector can become fit for purpose for the fourth industrial revolution.
“If we get this right, the prize is huge. The UK’s world-leading financial services sector will become an even stronger cornerstone for the economy, leading technological innovation, keeping the country at the top of the global financial table and driving the British economy to new levels of productivity and prosperity.”