The government has today laid before Parliament the second consultation on the Future Regulatory Framework (FRF) Review, Financial Services Future Regulatory Framework Review: Proposals for Reform (CP 548). The FRF Review provides a once-in-a-generation opportunity to ensure that, having left the EU, the UK establishes a coherent, agile, and internationally respected approach to financial services regulation that is right for the UK.
In his speech at Mansion House on 1 July 2021, the Chancellor set out the government’s 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. Delivering the outcomes of the FRF Review is a key part of achieving this vision.
An initial consultation was published in October 2020. HM Treasury received over 120 responses and has carried out significant further engagement with the sector. The consultation document laid today sets out the government’s response to the feedback received, and the proposals to deliver the intended outcomes of the FRF Review.
The consultation sets out a number of proposals to build on the strengths of the UK’s existing domestic framework of financial services regulation, including by:
- Ensuring that, as the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), take on greater responsibility, their objectives continue to be appropriate. To reflect the importance of the sector as an engine for growth across the wider economy and the UK’s position as a global financial centre, the government intends to introduce a new secondary growth and international competitiveness objective for both the PRA and the FCA.
- Moving to a system where the financial services regulators take responsibility for setting many of the direct regulatory requirements which were previously set by the EU, establishing a comprehensive FSMA model of financial services regulation for the UK. This will be achieved by repealing the majority of retained EU financial services legislation, with the regulators given powers to replace the current requirements with their own rules. This will ensure a more agile regulatory framework for the future while supporting the UK’s commitment to high standards of regulation.
- Ensuring that there continues to be appropriate democratic input into, and public oversight of, the regulators’ activities. This means strengthening the mechanisms through which Parliament holds the regulators to account and which underpin the regulators’ relationship with HM Treasury, in addition to proposals to improve stakeholder engagement in the regulatory policymaking process.
This publication is available on www.gov.uk and will be open for responses until 9 February 2022.
Future Regulatory Framework Review: Proposals for Reform: www.gov.uk/government/consultations/future-regulatory-framework-frf-review-proposals-for-reform
This statement has also been made in the House of Lords