The Danger of Divergence: Transatlantic Financial Reform and the G20 Agenda - London launch

Gary Campkin , TheCityUK’ s Director of International Strategy , welcomed a distinguished set of speakers in London to discuss the Atlantic Council’s report, The Danger of Divergence: Transatlantic Financial Reform & the G20 Agenda, also sponsored by TheCityUK and Thomson Reuters. This report provides new analysis and key insights into the issues associated with financial regulatory divergence, and demonstrates’ the vital importance of transatlantic financial cooperation.


This insightful & incisive report was the result of a significant partnership between the Atlantic Council, Thomson Reuters & TheCityUK.  It provides both a stocktake & a way forward; a warning about the practical dangers of regulatory divergence across the Atlantic & a way of responding to those dangers.  TheCityUK is delighted to be associated with this report and the debate that it has generated.

Just a word about TheCityUK:  we are the membership organisation for financial and related professional services firms in the United Kingdom.  Our membership covers banking, insurance, asset management, lawyers, accountants & business advisory services.   These are both domestic & international – including from the US.  We have an active agenda related to the liberalisation of trade & investment, the opening of new markets and the introduction of better regulation at the UK, European and global levels.

Key messages from the report

Put simply: the current system of transatlantic co-operation is not working as effectively as it could.

The report clearly illustrates how the existing mechanisms often attempt to tackle the divergences after they have occurred, rather than anticipating and addressing them beforehand.   It also throws light on processes that do not make the best use of consultation, transparency & shared outcomes.

We endorse the view that there needs to be a new generation of agreements based on formal commitment to co-operation. This would include the scheduling, scope, content and level of participation in the consultative process.

It would address a significant set of issues facing the sector which include the challenge posed by compliance with conflicting jurisdictions, ET, even potential criminal charges in one jurisdiction as a result of compliance in another, & the very real threat of balkanisation of liquidity pools across platforms with all the concomitant negatives that would arise for our economies.


And that’s where TTIP – the Transatlantic Trade & Investment Partnership - negotiations come in.    As someone who’s been deeply engaged in transatlantic issues for almost three decades, it’s my view that this is the once in a generational opportunity to secure significant & lasting gains from the creation of a truly transatlantic marketplace.  And, if successful, it would give us the template to deal with the so-called 21st century issues & influence the direction of global frameworks & rules on these issues.

In addition to market access, UK financial & related professional services’ real concern that TTIP should include provisions on regulatory coherence for financial services is a concern that US firms share.  This means, for example, that better coherence could reduce the costs of funds for business on both sides of the Atlantic, spurring growth & jobs, & avoiding the threats posed by balkanisation mentioned earlier. 

Our strong view is therefore that the TTIP’s proposed arrangements for regulatory coherence, which will likely cover a wide range of both EU and US measures affecting trade in goods and services, should extend to financial services regulation as much as to the regulation of any other sector.  It would be perverse to exclude a sector such as financial services which has a central role in investment, exports, growth, jobs and wealth-creation.  A recent report from the OECD reinforced these same points about where the value in the TTIP lies.

But I’ve heard some who believe that this issue should be excluded from TTIP. And their arguments often revolve around a mis-understanding or mis-interpretation of what is being proposed.  So for the sake of clarity, let me explain what the business community is looking for from coherence in TTIP, and what it is not:

  • We do want a regulatory dialogue that is more disciplined, transparent, timely and accountable, reaching better-coordinated results, anticipating and solving regulatory problems in advance (e.g. via “substituted compliance”), rather than examining them after they’ve arisen and are already damaging business.  This is the ex-ante as well as the ex-post approach
  • We don’t want to take the regulatory dialogue out of the hands of regulators (the only people capable of conducting it); we don’t want to put it in the hands of trade negotiators; we don’t seek to curb US regulators’ much-prized independence; and we are not looking to undermine Dodd-Frank.

The Atlantic Council report explains why the current arrangements do not work effectively. To those who want to put the financial services sector into a too difficult to do basket I would say this:  seizing the moment & enabling TTIP to provide a better wrapper to handle regulatory coherence issues is a prize well worth the winning.


Finally, can I record TCUK’s thanks to our partners at Thomson Reuters & to the team at the Atlantic Council. It has been a pleasure working with you on this crucial set of issues.  As the political stock take on TTIP gets closer, this report will help focus minds on the need to conclude an ambitious and comprehensive agreement, the scale of what is at stake & the costs of failing to find the right solutions. 

Thank you to all of you too for taking time out of your schedules to participate in today’s event. It’s encouraging to see the level of interest generated by this report.  I look forward to our discussions & to all of us taking up the challenge posed by the report in a responsible & positive manner.