Treasury is consulting on proposals for reform to the financial services regulatory framework, following the Chancellor’s announcement in his July Mansion House speech.
The consultation builds on the October 2020 consultation. Key points and proposals include:
- the Government believes the PRA/FCA model remains the most appropriate way to regulate financial services in the UK under the FSMA model;
- post-Brexit, there can now be greater focus on growth and competitiveness, which can be achieved by adding new statutory secondary objectives for both PRA and FCA;
- existing principles can also be amended to ensure sustainable growth consistent with the commitment to a net zero economy by 2050;
- after the exercise of onshoring legislation post-Brexit, the Government appreciates how hard it is to find relevant regulatory requirements, and wants to move many of the retained requirements to become direct regulatory requirements set by the regulators – thus creating a natural evolution of the rulebooks as the retained EU law is gradually repealed and replaced. The Government expects that initially the requirements will effectively be carried over, but over time, the regulators will have the scope to tailor the rules;
- to help with this, the Government proposes a new “designated activities” regime, to allow the regulation of certain activities outside FSMA and the RAO – for example, to keep the current EU-derived controls on short selling; and
- with added powers must come added controls and accountability for regulators.
The consultation closes on 9 February 2022.