Key Facts

• Amendment 21 requires the FCA to consider high standards in social practice and corporate governance when making Part 9C rules.
• Amendment 25 would require similar considerations for CRR rules made by the FCA.
• Alison Levitt QC's report on boohoo found that allegations about poor conditions in the supply chain were 'substantially true'.
• The amendment is tabled by the Labour Front Bench in response to concerns over investor engagement with problematic firms like boohoo.
• Standard Life Aberdeen sold all its shares in boohoo due to lack of progress on supply chain issues.
• Other major investors, such as Jupiter, Fidelity, Invesco, BlackRock, and Standard Life Aberdeen (except for the latter), have not taken meaningful action despite statements about ESG principles.
• The UK has some of the toughest requirements on bonus clawback and deference in the world.
• The senior manager and conduct regime was extended to cover insurance firms in December 2018 and most other FCA-regulated firms by December last year.
• The MP is conducting challenges to bank CEOs regarding talent pipelines for women.
• Amendment 25 requires the FCA to consider social and corporate governance standards when making capital requirements regulation rules.
• BrewDog is highlighted as an example of a company that has successfully incorporated carbon neutrality into its business model.
• The Equal Pay Act 1970 is cited as an example where government intervention led to companies publishing data on pay gender discrepancies, leading to improved social and economic outcomes.
• The amendment aims to push employers to set aspirational targets for increasing diversity and inclusion.
• Barclays provided £24.58 billion of underwriting and lending to large fossil fuel companies in the first nine months of 2021, a £200 million increase over the same period in 2019.
• The Minister launched work with the Corporation of London on social diversity and intends to enhance public scrutiny of regulators.
• Rupa Huq proposes amendments to schedule 2 and schedule 3.
• The amendments aim to ensure that the FCA considers the likely effect of rules on trade frictions between the UK and EU.
• There is concern about potential overspill from disputes in one sector affecting others, such as from Airbus/Boeing impacting Scotch whisky and cashmere.
• Amendment 26 in schedule 3 proposes new requirements for the PRA.
• The proposed change mandates submission of draft CRR rules for parliamentary scrutiny.
• This is to ensure better oversight and alignment with financial regulations.
• The amendment addresses when in the regulatory process parliamentary involvement should occur.
• Paragraph 3.18 of the future regulatory framework review suggests existing scrutiny mechanisms will remain effective.
• The ECON Committee in the European Parliament has a role in considering draft regulations before finalization.
• The Financial Conduct Authority (FCA) has sometimes failed to adequately consider consumer risks.
• Amendment 22 seeks to replicate the scrutiny provided by European Union mechanisms within UK Parliament.
• New clauses proposed aim to address gaps in current regulatory oversight.
• The Office of Fair Trading was not suitable for some financial procedures.
• Financial scandals indicate the need for better oversight.
• Treasury Committee is already stretched with its current workload.
• The Bill requires the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) to publish explanations of draft rules.
• The FCA and PRA will consult industry and regulators during rule-making processes.
• There are concerns about uncertainty if Parliament were to scrutinise each proposed rule without a definite timeframe.
• Schedule 2 contains provisions enabling the FCA to implement a tailored prudential regime for non-systemic investment firms.
• The new regime sets out capital and liquidity requirements to ensure orderly winding down of firms without causing harm.
• The FCA must consider public policy considerations, including international standards and UK's standing as a financial hub.
• The amendment aims to ensure scrutiny and transparency over regulatory divergence.
• It requires the Treasury to provide reasons for revocation of CRR provisions within six months.
• The report must assess impacts on consumers, competitiveness, and the broader economy.
• The Financial Services Bill aims to delegate more responsibility to regulators with robust accountability mechanisms.
• Clause 1 removes FCA investment firms from the CRR while Clause 3 enables implementation of Basel standards by revoking parts of the CRR that relate to Basel.
• Revocations will be subject to draft affirmative procedure, allowing Parliament to debate their appropriateness before they are made.
• Clause 3 of the Financial Services Bill creates legislative space for the PRA to implement Basel standards.
• Checks and balances are ensured through constraints on Treasury powers and draft affirmative procedures.
• Transitional provisions protect permissions granted by the PRA.
• New clause 1 proposes annual reviews of changes to CRR rules made by the PRA.
• The review must include an assessment of impacts on consumers, competitiveness, and the wider economy.
• Amendment 40 seeks to add language after 'activities' in Schedule 3.
• It ensures consideration of the impact on the UK's standing for internationally active financial firms.
• The amendment is described as a modest drafting change.
• The amendment aims to ensure regulators have specific regard to UK's ambitions for international businesses.
• Subsections (1)(b) and (2) of proposed new section 144C require the PRA to consider where international firms are most likely to be based or carry on activities.
• The Bill includes a more appropriate reporting requirement for the PRA as set out in proposed new section 144D.
• The changes to the CRA regulation stem from 'Basel III: Finalising post-crisis reforms' document released in December 2017.
• Clause 6 will be used solely for implementing Basel 3.1 reforms.
• Two eligibility criteria for credit rating agencies are added as part of these minor amendments.
• Amendment 32 aims to remove the time limit on derogation under Article 500d.
• EU brought forward the provision through a derogation effective until 28 June 2021.
• UK regulators aim to finalise rules by January 2022, aligning with industry concerns about regulatory reform volume in 2021.
• Amendment 32 agreed to.
• Schedule 4, as amended, agreed to.
• Further consideration ordered to be adjourned till Thursday 26 November at half-past Eleven o’clock.