Key Facts

• Maria Miller is presiding over the Public Bill Committee.
• The discussion centres around Clause 1, which proposes revoking retained EU law regarding financial services and markets.
• Peter Grant moves an amendment to prevent the Treasury from revoking legislation if it would be prejudicial to consumers without mitigation.
• Clause 1 provides powers to amend a large amount of existing legislation.
• The Bill aims to enable the UK's financial services sector to thrive outside the EU.
• There is concern about drafting errors and overlooking issues impacting constituents.
• Clause 1 of the Bill revokes retained EU law on financial services.
• The Financial Services and Markets Act 2000 model is used, delegating regulatory standards setting to independent regulators within Parliament-set frameworks.
• There are no arbitrary backstop dates for revisiting rules, ensuring continuity until appropriate for UK circumstances.
• There is a 'transitional period' for revoking provisions from retained EU law.
• Clause 1 of the Bill will revoke retained EU law, with schedule 1 listing specific laws to be revoked.
• Part 5 of schedule 1 acts as a 'sweeper provision', capturing all EU derived legislation not directly listed in parts 1 to 3.
• Clause 3 - Power to make further transitional amendments.
• Government amendment 2 proposed.
• Clause 4 and clause 5 also to be discussed.
• Clauses 3, 4, and 5 create powers to modify retained EU law during a transitional period.
• Clause 3 enables the Treasury to make proportionate modifications before repeal.
• Clause 4 allows for restating retained EU law towards a comprehensive FSMA model of regulation.
• Clause 5 permits replacing references to EU directives in domestic legislation.
• The clauses give the Treasury power to amend legislation with parliamentary oversight.
• Clause 1 involves repeal and revocation of legislation without further scrutiny from Parliament.
• The Government intends to introduce an amendment that may grant broad powers to direct regulators, raising concerns.
• Andrew Griffith reassures MPs about the robust monitoring and maintenance of constraints on Treasury's actions.
• Clause 6 enables the Treasury to exempt regulators from full consultations and cost-benefit analyses for rules that are 'materially similar' to existing retained EU law.
• Clause 7 defines key terms used in clauses 1 to 6, including what constitutes a 'regulator'.
• Regulatory rules implemented under EU directives will not be revoked by the Bill but remain under regulator control.
• Schedule 2 makes amendments to the MiFID framework.
• It removes the share trading obligation and double volume cap.
• Part 1 revokes current pre-trade requirements and gives the FCA new powers for transparency conditions.
• The definition of systematic internaliser is amended to reduce administrative burdens on investment firms.
• Schedule 2 amends derivatives trading obligations, including exemptions from post-trade risk reduction services and modifications to position limits.
• Part 3 of schedule 2 increases choice for UK investors in non-UK STS securitisations.
• The banking, financial services and insurance sector in the UK poses systemic risks if not properly regulated.
• The MP expresses concerns that businesses might push for less transparent and profitable operations which could leave national balance sheets with cleanup costs when risks crystallise.
• Amendment would allow the Treasury to designate and regulate businesses raising finance through public solicitation outside of authorised share issues.
• Case examples include Blackmore Bond and Safe Hands Funeral Plans.
• Concerns raised about current regulatory weaknesses and lack of clarity on which legislation covers specific loopholes.
• The amendment seeks to bring offers of non-equity securities, such as retail bonds, into regulation through the designated activities regime.
• Proposed new schedule 6B of the Financial Services and Markets Act 2000 includes offering securities to the public.
• In April 2021, the Government consulted on regulating non-transferable debt securities including mini-bonds.