House of Lords updates on FSM Bill

Ahead of the seventh day of debate on the FSM Bill in the Grand Committee, the House of Lords has published:

  • a new list of amendments;
  • a letter promised by Baroness Penn to all members on matters raised at the second reading. The letter covers
    • the government’s position on regulatory statutory objectives and principles. This confirms that objectives sit above principles, should there be tension
    • the government’s commitment to considering the needs of the mutual model without any need to further amend legislation
    • how the government has considered examples of international competitiveness objectives
    • the impact of the Bill on trade agreements with the EU – in the course of which she updated that the UK government is ready to sign the MoU to create the UK-EU Financial Regulatory Forum but the EU is not;
    • stablecoins and how the government proposes to deal with risks of fluctuations in value
    • the importance of cash and how the government wants to ensure that people have access to appropriate financial services, including non-cash transactions
    • APP fraud and how the government plans to work across sectors to ensure proper protections are in place
    • SLAPPs and how the government has committed to targeted anti-SLAPP reforms, but does not consider the FSM Bill the place to do it
    • the possibility of consolidating financial services legislation – which is not currently contemplated; and
  • a letter promised by Baroness Penn to Lord Sharkey on the repeal and replacement of retained EU law. Lord Sharkey had asked for clarification on who would decide whether replacement of retained law was appropriate and whether consultation was necessary.  She said the regulators will be able to make rules in relation to activities that are currently regulated but, in relation to activities not currently within the FSMA perimeter which the government considers should be regulated, it will make these decisions under mechanisms such as the proposed Designated Activities Regime. Where regulators have the power to make changes, they will usually be subject to the FSMA duty to consult, and Treasury will work closely with them. The Government has committed not to make changes just for changes sake and will expect to consult if either it is proposing to repeal EU laws without replacement or bring new activities within regulation. She gave as examples the current consultation on retail disclosure following the proposal to repeal the PRIIPS regulation, but noted the government did not consider it appropriate to consult on its decision to repeal the ELTIF Regulation without replacing it as no UK fund has been set up under it so noone will be affected by the repeal.

Emma Radmore