A big bang of policy proposals for the UK financial sector?

A raft of policy announcements relating to financial services is in the offing.

The Financial Services and Markets Bill is scheduled to complete its passage through the House of Commons on 7 December. The wide-ranging Bill implements the outcomes of the government’s future regulatory framework review. Once the Bill has cleared the final stages in the House of Commons, it will progress to the House of Lords.

Since it was put before Parliament in July, several amendments have been made to the Bill. These have mainly been technical changes, such as allowing the Chair of the PSR, if different from the Chair of the FCA, to join the FCA Board. The most notable change has been the new Clause 61 which confirms that the Treasury has the power to bring cryptoassets (broadly defined) into the scope of the UK regulated activities and financial promotions regimes. A separate amendment clarifies that the incoming designated activities regime may also be used to regulate cryptoassets.

One amendment which has not been made relates to the so-called call-in right. This refers to the mooted power for the government to direct a regulator to change its rules in the public interest. Having not been included in the version of the Bill introduced to Parliament, the plan had been to table this intervention power as an amendment. Instead, after regulators expressed concerns that the measure could undermine their independence, the government has decided to shelve the idea.

Coinciding with the Bill completing this milestone, the government is expected to unveil several initiatives relating to financial services. At a recent speech, Andrew Griffith (Economic Secretary to the Treasury) promised that these would include a further package of reforms repealing EU law and replacing it with rules tailor-made to the UK market. He emphasised that this would not be “deregulation for deregulation’s sake” but instead finding ways for the UK to be more agile and competitive.

The initiatives could include papers from the Treasury on the following:

• Future regulatory framework – to provide more detail on how the government plans to undertake its phased “lift and shift” taking regulatory obligations off the statute books and into regulators’ rulebooks.
• Ring-fencing – to respond to the independent review which earlier in the year recommended that the regime be retained but also made several suggestions for reform.
• Overseas framework – to follow its 2020 paper on how different overseas regimes are used which, for example, highlighted the overlap between the overseas persons exclusion and equivalence under UK MiFIR.
• Capital markets reforms – to follow Mark Austin’s review into capital raising processes for publicly-traded companies in the UK.
• Consumer credit – to consult on reforms to the Consumer Credit Act.
• Buy-now pay-later – to propose legislation for regulating BNPL products.
• Payments – to follow its payments landscape review.
• Crypto regulation – to consult on regulating a wider range of cryptoassets beyond payment stablecoins.
• Financial promotions – to put forward legislation restricting how cryptoasset activities are marketed.

The FCA, PRA and Bank of England may also coordinate additional announcements and release an updated regulatory initiatives grid. These various strands of policy work will shape firms’ regulatory agenda for 2023 and beyond.