Key Facts

• The amendment seeks to allow the Treasury to determine the metrics and period for regulator performance measurement.
• FSMA already requires annual reports from regulators, but they can select their own metrics.
• FCA and PRA publish operational data annually in their reports.
• Clause 28 enables the Treasury to make regulations requiring the FCA or PRA to make rules in certain areas.
• The clause is designed to balance regulator, Treasury, and Parliament responsibilities post-EU.
• New clauses aim to ensure regulators consider financial inclusion when making rules.
• Over one million people in the UK do not have bank accounts.
• One in four households lack insurance protection.
• One in five adults cannot cover more than one month of living expenses without income.
• The Financial Inclusion Commission recommends that the FCA should address financial inclusion issues.
• Phoenix Group, a FTSE 100 company, supports requiring the FCA to have regard to financial inclusion.
• There is criticism of the Financial Inclusion Forum for being exclusive and having limited transparency.
• Retail financial services sector is focused on complex products and distribution networks, not customers.
• Products with up-front but capped pricing that everyone understands were throttled out of existence.
• Market dynamics are moving provision away from people on lower incomes.
• The Social Market Foundation research shows an extra cost of £160 for car insurance when paid monthly instead of annually.
• Andrew Griffith acknowledges that regulatory burdens can raise costs and exclude parts of society from accessing products.
• Phoenix Group testified that the FCA has the clearest ability and access to information regarding financial inclusion.
• Clause 29 introduces a power for the Treasury to specify matters that regulators must have regard to in rule-making.
• Clause 30 ensures interaction between regulator rule-making and supervisory responsibilities with Treasury’s deference decisions on overseas jurisdictions.
• Clause 31 mandates regulators to consider material risks of rule changes being incompatible with international trade obligations before proceeding.
• Amendment 49 aims to require the FCA to publish a list of all consultees for public consultations.
• FSMA already requires the FCA to publish information regarding responses to their public consultations.
• The Government believes transparency in policy-making supports effective scrutiny but fears it could deter stakeholders from participating openly.
• Amendment 3 is proposed by Andrew Griffith.
• It aims to align notification provisions with the duty for the FCA to have regard to regulatory principles in section 1B(5)(a) of the Financial Services and Markets Act 2000.
• The amendment ensures that the FCA demonstrates it has considered these principles when preparing proposals.
• Amendments 3 and 4 address a minor drafting error in Clause 36.
• The amendments ensure alignment of notification requirements with FSMA's broader requirements.
• TheCityUK proposes giving the Treasury power to mandate specific performance metrics from regulators.
• Clause 37 inserts proposed new section 415C into the Financial Services and Markets Act.
• The FCA, FOS, and FSCS already co-operate through a voluntary framework launched in January 2022.
• Proposed subsection (6)(a) requires annual reports on compliance with the duty to co-operate.
• Clauses 38 and 39 aim to place statutory footing for the FCA’s listing authority advisory panel and PRA practitioner panel’s insurance sub-committee.
• Clause 40 requires the FCA and PRA to consult a cost-benefit analysis (CBA) panel on policy development, with thresholds set by regulators for minor rule changes.
• Amendments 51 to 54 seek specific requirements for CBA process and representation in the FCA’s panels but are not recommended by Hammond.
• Hammond supports clause 40 which sets out the agenda, membership, metrics and outputs for cost-benefit panels.
• He proposes amendments seeking clearer independence of the panels from regulators and regular publication of responses.
• The FCA is required to produce an annual report under existing statutes.
• The Bank of England will take on additional responsibility regarding the regulation of central counterparties (CCPs) and central securities depositories (CSDs).
• Clause 43 confirms that protecting and enhancing UK financial stability remains the primary objective for the Bank when regulating CCPs and CSDs.
• A new statutory financial market infrastructure committee will be established within the Bank to oversee its functions related to CCPs and CSDs.
• The Financial Services and Markets Bill includes clause 44, which proposes giving the Treasury intervention powers over regulators.
• Industry stakeholders have expressed concerns about the potential impact on the UK's regulatory reputation and independence.
• Previous intervention powers were at the Brussels level and are now being repatriated to create a rulebook for the United Kingdom.