On the 20th of July legislation was introduced into Parliament that will affect the future of the financial services industry in the UK. The Financial Services Bill has been published to enhance the industry's competitiveness in the UK and encourage growth and investment. We’re here to give you the low down on the Bill.
The Financial Services Bill:
1. Repealing EU retained laws- Following our exit from the EU this Bill repeals laws that had regulated the Financial Services sector. Chancellor Nadhim Zahawi said:
“Through the introduction of this Bill, we are repealing hundreds of pieces of burdensome EU regulations and seizing on the benefits of Brexit to ensure the financial sector works in the interests of British people and businesses.”
2. Replacing the old with the new- the repealed EU laws will be replaced by UK legislation. UK financial regulators will have greater responsibility for setting the requirements of UK Financial Services.
The Bill will reform the previous EU legislation including removing the share trading obligation and double volume cap from MiFID II, which restrict how and where firms can execute trades, and granting the FCA new powers to enhance the transparency and practical function of markets.
The Bill aims to reduce technical and regulatory barriers to trade, with new powers given to the government and regulators allowing them to implement Mutual Recognition Agreements between trading partners.
3. New objective- The Bill tasks regulators with a new objective. On top of ensuring the safety and soundness of firms, protecting and enhancing the integrity of the UK financial system, promoting competition in the interests of consumers, and ensuring that consumers receive an appropriate degree of protection- regulators must also promote the growth and competitiveness of the UK economy including the financial services sector.
4. Innovation- The government wants the UK to be at the forefront of new technologies. They have enabled specific processes in the Bill intending to put the Financial Services in the position to innovate. One of the changes is that certain stablecoins (cryptocurrencies) can be regulated as a form of payment. A second is the introduction of Financial Markets Infrastructure Sandboxes. This allows firms to test the use of new technologies and practices in financial markets
5. Accountability- The Bill also includes a new ‘rule review’ power to improve the regulators' accountability. It enables the government to direct the regulators to review their rules where it is in the public interest.
6. Consumer Safety- Many parts of the Bill focus on protecting consumers. Measures in the legislation include safeguarding access to cash and powers to enable the Payments Systems Regulator to direct banks to reimburse victims of APP fraud. There are also measures to establish a new regulatory pathway for firms to approve financial promotions and ensure they better reflect FCA rules. This is being done to make sure promotions are fair, transparent, and not misleading.