Key Facts

• The Investment Association represents UK-based fund managers with an industry value of £8.5 trillion.
• Around 9,000 funds are currently available to UK investors through the current regime.
• The UK manages around 37% of Europe’s assets, facilitated by measures such as this proposed regulatory change.
• Section 272 is being reviewed and a new proposal allows the FCA to assess fund structures across the board rather than individual funds.
• The Financial Services Bill incorporates a significant body of EU law into UK law.
• It sets up an overseas fund regime granting country-specific equivalence decisions to the Treasury.
• 37% of Europe’s assets are managed in the UK.
• PRIIPs KID methodology led to pro-cyclical reporting that was considered deeply misleading.
• The industry lobbied against the introduction of PRIIPs KID into open-ended funds due to its impact on millions of people in the UK and Europe.
• There is a need for an outcome-based approach rather than prescriptive rules to reduce costs and navigation challenges between two sets of regulatory requirements.
• MiFID approach in the EU suggested all research had to be paid for by investment managers.
• US regulations found such payments illegal.
• Investment management industry relies on public information and quality audits.
• Cummings offers to review the Bill section related to audit firms' relationships and propose improvements if needed.
• ARGA (Audit Regulator) is proposed as a statutory independent regulator.
• Emma Reynolds represents TheCityUK which supports the UK financial services industry.
• TheCityUK employs 2.3 million people, two thirds of whom are based outside London.
• Emma highlights that while the Bill is a welcome first step, there is a need for an overall strategy to address broader issues such as access to skills and talent from abroad.
• Rupa Huq is speaking as part of the Scottish National party.
• The discussion revolves around the Financial Services Bill and its implications for regulatory oversight.
• Catherine McGuinness mentions a proposal for a joint Select Committee on financial regulation to enhance scrutiny.
• The International Regulatory Strategy Group (IRSG) is a cross-sectoral group providing recommendations.
• The Bill is seen as a first step towards an overarching strategy for financial services.
• TheCityUK recommends working towards implementing EU capital regulation requirements and requires further guidance from the Government on CRR II.
• EU has advanced its own taxonomy for green finance.
• The UK is looking at developing its own taxonomy.
• There is a risk of regulatory divergence from both sides as they exercise autonomy post-Brexit.
• Global standards are critical to avoid a 'race to the bottom'.
• The FCA is conducting a review under new leadership.
• Adam Farkas is CEO of AFME, representing banks from various jurisdictions that do business in the UK and EU.
• Constance Usherwood is director of prudential regulation at AFME.
• The panel discusses the role of the UK in shaping EU financial services regulations.
• The Financial Services Bill gives the FCA new powers to direct the administrator to change the methodology of LIBOR during wind-down periods.
• Equivalence determinations provide legal framework for access between jurisdictions; lack thereof limits market access for UK-based firms in EU markets.
• Preparing for no equivalence involves setting up entities within the EU to continue serving clients, which incurs costs and operational implications.
• The Bill provides a framework for future UK financial regulation but does not guarantee alignment with EU policy recommendations.
• Legacy contracts and LIBOR transition are under FCA's global co-ordination process.
• Climate risk is not currently considered in prudential regulation by the Basel framework.
• Rupa Huq addresses concerns about potential EU protectionism in financial regulation.
• The Financial Services Bill aims to delegate rule-making powers to authorities like PRA and FCA.
• Advocacy for maintaining open markets and consistent implementation of global standards is emphasized.
• Rupa Huq thanks the two previous witnesses for their evidence.
• Gurpreet Manku is introduced as deputy director general and director of policy at the British Private Equity and Venture Capital Association (BVCA).
• The BVCA represents over 300 private equity and venture capital firms in the UK.
• UK regulated private equity and venture capital firms under alternative investment fund managers directive and MiFID.
• Advisory entities will face higher capital requirements under the new regime.
• The target implementation date is January 2022, providing time for consultation and adaptation.
• Peter Tutton is head of policy at StepChange Debt Charity.
• The statutory debt repayment plan is discussed as a key option during an eight-week moratorium period for individuals in financial difficulty.
• Rupa Huq facilitates a panel discussion on the Financial Services Bill until 5 o'clock.
• The new debt protection schemes will offer guarantees against collections activity and enforcement action.
• Help-to-Save allows people to save up to £50 per month for four years, with a government transfer of £600 after two years if they save £1,200.
• The speaker suggests ensuring that savers are automatically moved into a secure NS&I account to prevent disengagement.
• The breathing space period is currently set up but may be nervous about extending it.
• There are concerns over the adequacy of funding for statutory debt repayment plans, currently at around 9%.
• The impact of Covid has led to increased unemployment and debt burdens, while some people have become better off due to reduced spending.
• There are approximately 222,000 help-to-save accounts with £85 million in them.
• The Government should ensure clear communication about the transition for people on universal credit and tax credits.
• Extending account durations could benefit lower-income savers by providing more time to accumulate savings and bonuses.
• A legal duty of care is supported as a means to prevent exploitation of vulnerable consumers in financial services.
• Clients often have multiple creditors, averaging about five or six.
• Creditors' good practice can be destabilised by just one aggressive creditor pushing for unaffordable payments.
• The debt arrangement scheme in Scotland provides a statutory framework that reduces clients' anxiety and supports recovery.
• The breathing space scheme aims to provide temporary protection from creditors.
• Debt relief orders and bankruptcy are discussed as potential debt solutions.
• Fees for bankruptcy and debt relief orders can be a barrier for individuals with low incomes.
• The Committee held eight evidence sessions today.
• Further consideration is adjourned until Thursday 19 November at half-past Eleven o'clock.