The financial services and markets bill, expected later this year, could see the Financial Conduct Authority and Prudential Regulation Authority become the most powerful regulators in the world, according to Lang Cat director of public affairs Tom McPhail.
Last month, in the Queen’s speech, the government announced plans to revoke EU financial services regulations and replace them with rules which are "designed for the UK".
Prince Charles, standing in for the Queen, announced that the government would bring in new legislation to "strengthen" the UK's financial services industry and ensure it acts "in the interest of all people and communities". This will be achieved through a financial services and markets bill which will be introduced in the coming year.
On FTAdviser’s latest podcast, McPhail said the impact of the bill was likely to be subtle at first, and would take some time to come through as it has been “advertised as a huge repeal of EU law”. It was therefore more about a shift in process.
“We are moving what is currently operating as legislation into regulation so it can be changed by the regulator more easily,” McPhail said.
“[This] arguably makes the FCA and PRA the most powerful regulators in the world because there are very few regulators with as light levels of democratic accountability as the UK regulators.
“But for those regulators part of the introduction of appropriate checks and balances are these new objectives which include growth and international competitiveness, but also a very broad ability for the Treasury to direct the FCA towards their policy goals.
“Actually, if the government says one of our objectives is to be saving to boost investment, then hopefully that will mean a more nuanced approach from the regulator but because these are almost sort of philosophical changes, changes in the outlook that they're trying to put through the regulator, it's likely to be many years before we see a significant impact in a lot of areas.”
The government has said the main benefits of the bill would consist of "cutting red tape" to make the UK a more attractive place to invest and do business while maintaining high standards.
Pimfa director of government relations and policy Tim Fassam agreed, saying while the bill would be notable, any real changes would not be visible for a few years to come.
“It's definitely significant and if you look at the work the Treasury was doing around the future regulatory framework review, I think that telegraphs some intentions there,” Fassam said.
“Just a few notes we've heard from the government already in terms of a kind of outline sketch of what they're planning to do in the bill, in the short term, we won't feel profound change because a lot of it is about shifting rulemaking powers from parliament on to the regulators.”
He explained the government was looking at the changes post-Brexit and wants international competitiveness.
“Long term there might be some quite significant changes, but it won't be an immediate bond,” he added.