Select committee: Treasury Committee
Recommendation 24
First Report - Future of financial services regulation
Published 16 Jun 2022
Paragraph 160
Addressed to HM Treasury
Treasury Committee Future of Financial Services All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Recommendation (the committee's words)
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.
From: Treasury Committee, First Report - Future of financial services regulation (HC 141), paragraph 160, 16 June 2022
Government response
The government responded to the whole report on 7 September 2022 (deadline 16 August 2022).
Summary written by Accountability Index from the government's response. It is not the government's own words.HM Treasury "notes" each of the Committee's recommendations, setting out the measures in the Financial Services and Markets Bill and, in places, explaining why it does not take the approach the Committee suggested.
- On secondary objectives, the government notes the recommendation and says Clause 24 of the FSM Bill implements new secondary objectives for the FCA and PRA on medium to long-term growth and competitiveness, subject to regulators "aligning with relevant international standards".
- On financial inclusion, it does not consider that a separate 'have regard' for the FCA "would lead to a different approach or tangible improvements over the current arrangements", noting that government already publishes an annual report.
- On a forward schedule for moving EU files to the rulebooks, it recognises that further information on the programme is important and "expects to set out further information in due course".
- On Treasury funding of rule reviews, it notes the recommendation and says the Bill requires the Treasury to 'have regard' to minimising the impact of a direction on the regulator's other functions. On CBA panels, it "does not agree" they would impact regulators' independence.