Key Facts

• New clause 28 requires a pre-commencement impact assessment before disapplying EU rules.
• New clause 36 mandates an annual review of the impact of regulatory divergence in financial services for ten years.
• The first annual report under new clause 36 must be published no later than July 1, 2021.
• The UK has withdrawn from joint decision-making processes with the EU regarding mutual access to financial services.
• A legislative mechanism exists in the Bill to grant equivalence recognition.
• Onshoring EU directives was intended to create a parallel position for the UK's financial services sector on day one of the transition period end.
• New clause 28 seeks an impact assessment before disapplying or applying different EU rules.
• New clause 36 proposes an annual review of decisions taken regarding divergence from the EU.
• The Governor of the Bank of England warned that a no-deal Brexit could lead to worse economic conditions than those experienced during the covid pandemic.
• New clause 2 deals with reporting on the status of EU considerations about UK equivalence.
• The Government has made 17 out of 30 required equivalence decisions post-Brexit.
• The Treasury will provide Parliament with information about the operation of the equivalence framework after the transition period.
• The new clause is silent on maintaining lockstep with EU regulations.
• It does not claim that equivalence decisions are within the gift of the government.
• The clause asks for a report on the outcome for UK financial services post-Brexit.
• UK has the most globally significant financial sector.
• There is a growing FinTech sector in the UK.
• Current retail banking market dominated by four or five high street names accounting for over 90% of current accounts, deposits, savings.
• StepChange estimates that one in ten people searching online are led to imposter or clone sites.
• The new clause aims to close a regulatory loophole by bringing lead generators for debt advice and solution services within the FCA's remit.
• The Minister has consistently resisted amendments and new clauses over recent weeks.
• New clause 15 amends section 1C(2) of the Financial Services and Markets Act 2000 to include prevention of consumer detriment.
• New clause 18 requires an investigation into FCA failures under section 73 of the Financial Services Act 2012.
• New clause 21 amends Schedule 6 of the Financial Services and Markets Act 2000, adding provisions for assessing risks of consumer detriment.
• New clause 23 requires the FCA to provide reports detailing reasons for decisions made on consumer redress schemes and their outcomes.
• New clause 38 introduces a 'Duty of Care Specification' for authorised persons carrying out regulated activities, ensuring they act honestly, fairly, and professionally in consumers' best interests.
• By December each year, the Secretary of State must introduce regulations requiring all financial services providers to act within a duty of care overseen by the FCA or publish reasons and set a timetable if not introduced.
• New clause 6 aims to introduce a duty of care for financial service providers.
• The FCA produced a paper on the topic in 2018 with a response in April 2022.
• A statutory new duty would require primary legislation.
• Andrew Bailey, former FCA chief executive, suggested weighing up possible changes.
• Duties of care exist in other fields such as tort law and Consumer Rights Act 2015.
• The clause empowers the FCA to define how this should be done within six months.
• Stella Creasy acknowledges the progress made by the Financial Conduct Authority (FCA) but emphasizes the need for faster action.
• The amendment aims to give a clear direction to the FCA about consumer detriment, preventing problems rather than just providing redress.
• Creasy believes in the importance of cutting through delays that leave constituents paying the price.
• The FCA failed to act quickly on payday lending companies like Wonga, QuickQuid, and BrightHouse.
• These companies led many constituents into excessive debt before collapsing or facing financial difficulties.
• Regulatory delays allowed exploitative practices to persist longer than necessary, causing significant harm to consumers.
• New clauses aim to improve FCA oversight by requiring investigation of failures, cost coverage assessment, and stronger redress schemes.
• Only 11% of people with cancer inform their bank about their diagnosis.
• One in three people with cancer experience a loss of income from employment following a diagnosis, averaging £860 per month.
• The Financial Conduct Authority (FCA) acknowledges that some firms fail to treat vulnerable customers fairly and cause harm.
• New clauses would introduce a legal duty of care for financial service providers to anticipate and understand customer needs.
• Organisations supporting the introduction of this duty include Macmillan Cancer Support, StepChange, Age UK, Alzheimer's Society, Money Charity, Fair By Design, and the Money and Pensions Service.
• New clause 6 proposes that the FCA have explicit regard for vulnerable consumers when discharging its consumer protection objective.
• The FCA is already taking steps to ensure customers are properly protected, including work on potential deficiencies in consumer protection.
• New clauses include requirements for the Treasury to review annually whether a statutory duty of care should be instructed by the FCA.
• The Money and Pensions Service was established last year.
• The Government announced an additional £37.8 million for free debt advice.
• The total budget for free debt advice is over £100 million this year.
• A new breathing space scheme will begin in May, offering a 60-day period with frozen fees and charges.
• The Committee divided with Ayes 6 and Noes 8.
• Further consideration of the bill was ordered to be adjourned.