The UK Financial Services and Markets Bill is a major reform to the UK's regulatory regime. It implements the government's future regulatory framework review and provides HM Treasury with a raft of new powers. The bill repeals EU law on financial services and re-designates many activities as
iux markets being regulated by UK regulators. The bill also changes the objectives and accountability of UK regulators.
HM Treasury has power to require regulators to review existing rules
The new rules will give HM Treasury the power to order regulators to review existing rules in the public interest. However, the Treasury has said that it will only use this power in exceptional circumstances, such as when there has been a significant change in market conditions or evidence that relevant rules are no longer relevant.
The new rules will allow HM Treasury to require regulators to review existing rules and publish the results. However, the regulators must respond to these letters. This will mean that regulators must publish their findings unless the report is not in the public interest. The Committee is concerned that the proposed rules may weaken the independence of regulators. It would be counterproductive for regulators to be forced to reverse or adjust existing rules to meet the Treasury's requirements.
The new rules will make regulators accountable for the effectiveness of the rules. They will also be able to make recommendations for further reform. HM Treasury's proposals are aimed at ensuring that the UK's financial system is stable and well-regulated. This is important as it will prevent new financial crises in the UK. The government will use the power to require regulators to review existing rules to ensure that they are working within the law.
The new rules are designed to respond to concerns raised by stakeholders. HM Treasury will require regulators to review existing rules to ensure that they are operating effectively and are in line with existing trade agreements. The proposed changes also include a new statutory panel to provide support for cost-benefit analyses.
The new financial legislation also includes measures to protect the access to cash and new powers to direct banks to reimburse victims of APP fraud. It also creates a regulatory pathway for firms to approve financial promotions. The power to require regulators to review existing rules is a key part of the new legislation.
Treasury has power to designate third party providers as critical
The EU Commission has proposed a regulatory framework aimed at digital operational resilience for the financial sector, but this does not have the same effect as DORA. DORA would establish a harmonised and granular system-wide framework for direct oversight of third-party ICT service providers. This approach would be more comprehensive and would require ESAs to consider a range of criteria, including systemic impact, substitutability, number of member states, and more.
The new power is expected to affect cloud computing providers and technology suppliers in the financial services sector in the UK. The Treasury explains in the document how it will implement the new regime, including the regulatory requirements. Businesses can expect the proposals to come into force later this year.
The government plans to introduce legislation for the critical third party regime when the parliamentary time permits. Once the legislation is introduced, financial regulators will publish a joint Discussion Paper to seek feedback from industry. A subsequent Consultation Paper will build on this feedback. Once the rules are finalised, HM Treasury expects to begin designating critical third party providers.
The governing body will designate these companies as critical to financial services and markets and this authority will be empowered to regulate these firms directly. The new regime will also include a system for coordinating with international and UK authorities as well as financial regulators outside the financial services sector.
Critical third party providers are expected to meet minimum resilience standards and undergo targeted resilience testing. Failures by these critical third parties will be publicised and the financial regulators will have the power to ban the third parties from providing services to UK firms. The new authority will also have the power to prevent the companies from using third party services in the future.
New powers for FCA
The new powers for the FCA under the financial services and markets bill give the regulator more flexibility to take action against firms. These powers include public censure, financial penalties, and the requirement for restitution. The bill also gives the regulator new powers to control the activities of investment exchanges and credit rating agencies.
The bill will be debated by parliament after the new Prime Minister is sworn in. It will take a few months before it reaches the Royal Assent stage. In the meantime, other key elements of the reform will be progressed in parallel. For example, the FCA will publish a consultation on new rules and regulations for the secondary markets in equity securities on 5 July 2022.
The FCA's secondary aim is to promote growth and competition within the UK economy and to promote international competitiveness. It will also have new powers to improve the functioning of markets and the transparency of transactions. It will also improve protections for consumers from fraudulent authorised push payment services.
The new powers for the FCA under the financial services and markets bill include the ability to regulate critical third parties (CTPs). These providers must adhere to the FCA and PRA rules to avoid risks to customers and the economy. In addition, the FCA will have the power to direct CTPs, including cloud computing providers.
In addition to these new powers, the bill includes measures to protect the public from the risks associated with APPs. It also imposes new rules on financial promotions. The FCA has previously complained about the quality of such promotions and has taken action to address the issue. By imposing new conditions, the new powers for the FCA will also strengthen and improve the safety of financial services.
The new powers will take effect in 2021 for the UK's largest banks and building societies. These new powers will also give the FCA the ability to enforce a wider range of rules. These powers will allow the regulator to direct CTPs to take specific actions based on certain information.
New powers for BoE
The Financial Services and Markets Bill introduces new powers for the Bank of England. The Bill is aimed at providing a framework to ensure the proper functioning of the financial system. It has many features which can be beneficial to the financial sector, including the ability to regulate and supervising the activities of banks and other financial institutions. The new powers would allow the BoE to intervene in the financial system if necessary.
The financial system is already under a number of government oversights, and the Bill will further strengthen these authorities. The current regulators, the PRA and FCA, oversee consumer protection and financial stability. Many of the decisions they make are set by members of the European Parliament. Taking away their independence could damage the UK's reputation and competitiveness.
The Bill also creates the Prudential Regulation Authority. This body will regulate a number of firms, including deposit takers, insurers and some smaller but significant investment firms. Its main role will be to protect the financial system by monitoring and addressing systemic risks. This body will report on the state of financial stability to the government.