The Financial Conduct Authority will be handed powers to enable it to replace EU law with its own rules.
According to the Financial Services Future Regulatory Framework Review: Proposals for Reform consultation paper published yesterday (November 9), the government wants to give UK regulators the ability to replace EU financial services law with their own rules.
The proposals include changes to the regulators’ statutory objectives and new mechanisms for accountability, scrutiny and oversight of the regulators by Parliament, HM Treasury and stakeholders.
The document represents the government's plan to return responsibility for designing and implementing regulatory requirements to the UK regulators, a break from the approach under EU law.
It builds on the previous consultation which set out the government’s proposals for important changes to the UK’s financial services regulatory framework, and seeks to build on the UK’s existing model of regulation established by the Financial Services and Markets Act 2000.
The government said: “In many instances, the government would expect the regulators to initially replace the repealed provisions with rules that are similar to those which are already in place.
“However, this approach will allow the regulators to ensure that the rules are properly tailored for the UK markets, and appropriately reflect their objectives. It will also mean that the rules can be more efficiently updated in the future, for example in response to new global standards, or to take account of new business models.”
In the paper, the government also said it will focus on growth and competitiveness by introducing new, statutory secondary objectives for the Prudential Regulation Authority and the FCA.
The government said the regulators’ statutory panels will be able to provide earlier input into the policy making process.
It will therefore ask regulators to publish a statement on their approach to the recruitment of panel members, ensuring the membership represents a diverse range of views.
It is also proposing to amend the existing regulatory principles to ensure that sustainable growth should occur in a way that is consistent with the government’s commitment to achieve a net zero economy by 2050.
Chancellor Rishi Sunak said the proposals set out his vision for “an agile and dynamic approach to regulation that supports the growth of the UK economy”.
He said: “Earlier in the year, I set out my vision for an open, green, and technologically advanced financial services sector that is globally competitive and acts in the interests of communities and citizens across the UK, creating jobs, supporting businesses and powering growth across the UK.
“One important part of that vision is ensuring, as an independent nation, that we have a coherent, agile and internationally-respected approach to financial services regulation that is right for the UK.
“Today’s proposals will support the future strength of the UK as a global financial centre, ensuring an agile and dynamic approach to regulation that supports the growth of the UK economy, without diverging from our continued commitment to high international standards.”