Mark Hoban announced the publication of the Government’s proposals for regulatory reform. He said stakeholder feedback had been important and had resulted in a number of changes to the proposals, which are currently in the form of a White Paper. Major changes include:
- a specific objective setting out the Prudential Regulation Authority’s (PRA) responsibilities for the insurance sector;
- an updated and enhanced competition regime under the Financial Conduct Authority (FCA); and
- steps to strengthen the handling of cases of widespread consumer detriment, including misselling.
The White Paper explains the context of the reform and remaining pieces of the reform jigsaw, including the action the Government will take once it has received the ICB’s final report. The draft Bill contains the Government’s core proposals for effecting the reform and takes the route of amending the Financial Services and Markets Act 2000 (FSMA) instead of repealing it and drafting new legislation. The White Paper:
- sets out the duties and scope of the Financial Policy Committee, PRA and FCA and how their work, and regulatory processes, must be co-ordinated;
- leaves open some issues the Government is still considering, such as some questions on recognised bodies and the clearing system, while introducing other changes, such as changes to the settlement regime;
- summarises responses to previous consultations and the Government’s reaction to those responses, particularly on the scope and accountability of the new authorities;
- addresses new powers for the FCA for product intervention and greater oversight of financial promotions;
- comments on the general support for retaining the existing regime for recognised bodies, and for the Listing Authority to be part of the FCA; and
- gives detail of proposals for dealing with authorisation applications, variations, and passporting issues.
The draft Bill contains 70 sections and lengthy Schedules, with explanatory notes. It is now to undergo pre-legislative scrutiny in Parliament, and the Government hopes to be able to introduce the formal Bill later this year. To help the pre-legislative scrutiny, which will start as soon as possible, and should take 12 weeks spanning the summer recess, Treasury will publish an amended version of FSMA, showing what the new law would look like. Meanwhile, it invites comments by 8 September on the draft Bill. (Source: Treasury press release on reform of 17 June and White Paper: A New Approach to Financial Regulation: A Blueprint for Reform)