Recommendations & Conclusions
7 items
12
Conclusion
Fifth Report - The Future Framework for…
Accepted
We believe that a measure of “ex-ante” scrutiny by Parliament is necessary. But we do not believe that it would be proportionate for Parliament or its committees to carry out, as a necessary part of the rule-making process, the detailed and comprehensive textual scrutiny which the European Parliament’s Economic and …
Read more
We believe that a measure of “ex-ante” scrutiny by Parliament is necessary. But we do not believe that it would be proportionate for Parliament or its committees to carry out, as a necessary part of the rule-making process, the detailed and comprehensive textual scrutiny which the European Parliament’s Economic and Monetary Affairs Committee conducts. The European Parliament’s legislative processes, under which the existing acquis of EU financial services rules was created, were designed for a parliamentary system which is quite different from that of the UK Parliament. (Paragraph 77) 28 The Future Framework for Regulation of Financial Services
Show less
Government response AI summary
The government welcomes the committee's recommendation for a 'targeted approach' to parliamentary scrutiny of regulator activity, agreeing that it is a more appropriate model than detailed textual scrutiny.
Read full response →
HM Treasury
5
Conclusion
First Report - Future of financial serv…
Accepted
Deregulation or simplification will in themselves impose costs on industry in the short term. Regulators should make every effort to limit the costs of compliance with the rules, for example by communicating planned changes in advance, grouping sets of changes together, and minimising the frequency of changes to those where …
Read more
Deregulation or simplification will in themselves impose costs on industry in the short term. Regulators should make every effort to limit the costs of compliance with the rules, for example by communicating planned changes in advance, grouping sets of changes together, and minimising the frequency of changes to those where a compelling need and a significant cost benefit has been articulated. That said, regulators should not let short-term costs, or the views of market participants who have already adapted to existing arrangements, limit the scale of their ambition when finding opportunities to genuinely simplify the regulatory framework without sacrificing resilience.
Show less
Government response AI summary
The FCA seeks to balance costs imposed on firms with delivering a strong system of regulation, prioritises work based on evidence of consumer harm or risks to market integrity, and makes use of cost benefit analysis and post-implementation reviews.
Read full response →
HM Treasury
8
Recommendation
First Report - Future of financial serv…
Accepted
We recommend that there should be a secondary objective for both the Financial Conduct Authority and the Prudential Regulation Authority to promote long-term economic growth. The wording will be crucial: pursuing international competitiveness in the short term is unlikely to lead to economic growth or international competitiveness in the long …
Read more
We recommend that there should be a secondary objective for both the Financial Conduct Authority and the Prudential Regulation Authority to promote long-term economic growth. The wording will be crucial: pursuing international competitiveness in the short term is unlikely to lead to economic growth or international competitiveness in the long term if it is achieved by weakening the UK’s strong regulatory standards. Weakening standards could reduce the financial resilience of the UK’s financial system and undermine international confidence in that system and the firms within it.
Show less
Government response AI summary
The government has implemented new secondary objectives for the FCA and PRA to focus on medium to long-term growth and competitiveness, while maintaining high regulatory standards.
Read full response →
HM Treasury
12
Recommendation
First Report - Future of financial serv…
Accepted
The FCA should make every effort to ensure that it is not designing or implementing regulation in a way which could unreasonably limit the provision of financial services to consumers who might benefit from them. When placing new requirements on firms, the FCA should consider not only the impact on …
Read more
The FCA should make every effort to ensure that it is not designing or implementing regulation in a way which could unreasonably limit the provision of financial services to consumers who might benefit from them. When placing new requirements on firms, the FCA should consider not only the impact on consumers and businesses, but also the impact on those who might be prevented from accessing financial services as a result of those new requirements, or who might find themselves accessing services on inferior terms. We recommend that the Treasury should require the FCA to have regard for financial inclusion in its rule-making, but not to make changes relating to financial inclusion to the FCA’s objectives.
Show less
Government response AI summary
The government states that the FCA's existing objectives and regulatory principles are already well-aligned with financial inclusion objectives.
Read full response →
HM Treasury
13
Recommendation
First Report - Future of financial serv…
Accepted
We welcome the clearer acknowledgement that the FCA is working to support financial inclusion, and we would urge the FCA to continue to do so. The FCA should provide an annual report to Parliament on the state of financial inclusion in the UK and the Treasury should consider putting this …
Read more
We welcome the clearer acknowledgement that the FCA is working to support financial inclusion, and we would urge the FCA to continue to do so. The FCA should provide an annual report to Parliament on the state of financial inclusion in the UK and the Treasury should consider putting this report on a statutory basis. This Future of financial services regulation 55 report should also include a summary of areas where the FCA’s work has supported financial inclusion or future work which could impact on financial inclusion; and any recommended additional measures lying within its area of competence and which could be taken by Government and other public bodies to promote financial inclusion. (Paragraph 91) The new normal
Show less
Government response AI summary
The government states that the FCA's existing objectives and regulatory principles are already well-aligned with financial inclusion objectives, and the government already publishes an annual report on financial inclusion.
Read full response →
HM Treasury
19
Recommendation
First Report - Future of financial serv…
Accepted
The information the FCA has made available on how it is performing against its service standards shows a deteriorating picture. The FCA has a reputation for being too slow in its authorisation work, and this will inevitably hold back British fintech companies and crypto firms as well as larger firms. …
Read more
The information the FCA has made available on how it is performing against its service standards shows a deteriorating picture. The FCA has a reputation for being too slow in its authorisation work, and this will inevitably hold back British fintech companies and crypto firms as well as larger firms. When the FCA publishes its next update on the service standards it should write to us, outlining any areas where it is still not meeting its statutory and voluntary timelines, and setting out its strategy for closing any gaps.
Show less
Government response AI summary
The FCA wrote to the Committee alongside the publication of their Annual Report and Operating Service Metrics and will keep the Committee updated on the progress made to reduce authorisation queues.
Read full response →
HM Treasury
24
Recommendation
First Report - Future of financial serv…
Accepted
The FCA should investigate whether there are more opportunities to enable larger firms to undertake controlled, supervised experiments with innovative products. For example, it may be desirable to allow firms to be more experimental with the designs of new products, by setting aside additional capital in order to compensate consumers …
Read more
The FCA should investigate whether there are more opportunities to enable larger firms to undertake controlled, supervised experiments with innovative products. For example, it may be desirable to allow firms to be more experimental with the designs of new products, by setting aside additional capital in order to compensate consumers generously if new products being tested out by a limited number of consumers turn out not to benefit those consumers as anticipated. This approach would not be without risks, and would have to be carefully designed to avoid disadvantaging smaller firms, but it is an example of the type of bold approach which the FCA should be prepared to consider.
Show less
Government response AI summary
The FCA will explore using market innovation services to support more large firms in controlled testing of innovative products, with measured safeguards.
Read full response →
HM Treasury