The government is planning to give the Financial Conduct Authority sweeping new powers in the financial services and markets bill, which was introduced to Parliament yesterday evening (July 21).
The bill will repeal EU rules over the British financial services industry and the FCA will be given greater responsibility to set requirements for financial services companies. It will also be required to promote growth and competitiveness in the sector.
Chancellor of the exchequer Nadhim Zahawi said the bill will complement the regulator's existing powers relating to the “safety and the soundness” of firms.
The bill has something for everyonePeter Bevan, Linklakers“The measures I have announced tonight will unleash growth across our financial services sector and will allow us to unlock tens of billions of pounds of investment into the UK economy,” he said.
“Consumers will remain protected, with legislation ensuring that victims of scams can be compensated while also acting to protect access to cash for the millions of people that rely on it.”
Controversial “call-in” powers, which would allow the government to intervene in financial regulation in the interest of the public, were not included in the bill and are said to be under consideration.
Peter Bevan, global head of Linklaters’ financial regulation group, said the bill had “something for everyone”.
“The aim is for regulators to have more control and flexibility over the requirements they set for financial institutions, but it will demand extensive collaboration between the government, regulators and industry to get there.”
The bill was welcomed by the industry, with Chris Cummings, the chief executive of the Investment Association, calling it an “important pillar” to ensure the UK remained a “leading centre for global investment management”.
“Our industry [welcomes] the increased focus on competitiveness and economic growth.
“This will be vital to enable our industry to provide the very best products and services, supporting UK consumers to secure a better future.”
David Postings, chief executive of UK Finance, said a successful financial services sector was critical for achieving economic growth and benefits the whole country.
“To ensure the sector continues to be successful, alongside maintaining the pace of reform, there needs to be a keen focus on international competitiveness from the next government.”
The introduction of the bill was outlined in the Queen's Speech earlier this year. It revokes EU financial services regulations, and replaces them with new rules "designed for the UK".
The main objectives of the bill are to "cut red tape" to make the UK a more attractive place to invest and do business, while maintaining high standards.
The bill will also enable some types of stablecoin to be regulated as a form of payment in the UK.
In a response to an industry consultation last year, the government has previously said certain stablecoins have the capacity to potentially become a widespread means of payment, driving consumer choice and efficiency.
Blair Halliday, head of UK at crypto exchange Gemini, said the bill recognised the “significant role” that certain digital assets will play in the future.
“This bill paves the way for ensuring greater consumer protection, while fostering innovation and more widespread digital asset adoption.”
sally.hickey@ft.com
