Future of Financial Services

Treasury Committee Closed Inquiry
Opened: 20 Nov 2020 Closed: 1 Nov 2022 Parliament page
This inquiry will look at the future of financial services after the Brexit transition period ends. It will examine how financial services regulations should be set and scrutinised by Parliament, as EU directives will cease to govern new rules and regulations. It will also consider how regulators are funded and … Read more
13 Recommendations
32 Conclusions
3 Reports
5 Letters
9 Events
Activity timeline 19 events
7 Sep
2022
Report published
6 Sep
2022
Correspondence
23 Jun
2022
Report published
16 Jun
2022
Report published
25 Apr
2022
Correspondence
25 Apr
2022
Correspondence
10 Mar
2022
Correspondence
2 Mar
2022
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
21 Feb
2022
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
17 Jan
2022
Formal meeting (oral evidence session) · Room 8, Palace of Westminster
6 Dec
2021
Formal meeting (oral evidence session) · Room 16, Palace of Westminster
25 Oct
2021
Formal meeting (oral evidence session) · Room 5, Palace of Westminster
Recommendations & Conclusions
45 results
1 Conclusion
Fifth Report - The Future Framewor…
We agree with the Treasury that the body of EU financial services rules that was...
We agree with the Treasury that the body of EU financial services rules that was on- shored during the process of leaving the EU should be moved into the regulators’ rule books. Keeping rules in statute could require Parliament to … Read more
Government Response
Second, I note the Committee’s view that ‘the body of EU financial services law that was on-shored during the process of leaving the EU should be moved into the regulators’ … Read more
HM Treasury
View details
2 Conclusion
Fifth Report - The Future Framewor…
The Treasury consultation alluded to certain UK-derived rules that are set out in UK statute,...
The Treasury consultation alluded to certain UK-derived rules that are set out in UK statute, and it suggested that regulators might be constrained as a result. But we found that the regulators did not appear to feel constrained by the … Read more
Government Response
Second, I note the Committee’s view that ‘the body of EU financial services law that was on-shored during the process of leaving the EU should be moved into the regulators’ … Read more
HM Treasury
View details
3 Conclusion
Fifth Report - The Future Framewor…
We understand the need for Treasury Ministers to be well informed of the regulators’ policy...
We understand the need for Treasury Ministers to be well informed of the regulators’ policy intentions as a matter of routine. However, we have not been provided with compelling evidence to justify changing the law to allow Ministers the absolute … Read more
Government Response
The Committee raises concerns that the proposals put forward by the Government, allowing for earlier feedback from the Treasury during the policy formation process, will damage the perception of regulatory … Read more
HM Treasury
View details
4 Conclusion
Fifth Report - The Future Framewor…
The Treasury has in the past been able to delay policies in the interests of...
The Treasury has in the past been able to delay policies in the interests of the wider negotiations that took place during the UK’s departure from the EU. This suggests that there is already sufficient and appropriate Treasury oversight of … Read more
Government Response
The Committee raises concerns that the proposals put forward by the Government, allowing for earlier feedback from the Treasury during the policy formation process, will damage the perception of regulatory … Read more
HM Treasury
View details
5 Conclusion
Fifth Report - The Future Framewor…
If the Treasury does wish to give itself the formal power to see policy proposals...
If the Treasury does wish to give itself the formal power to see policy proposals before they are made public, comments or suggested changes to them using this power should be published alongside the public consultation.
Government Response
The Committee raises concerns that the proposals put forward by the Government, allowing for earlier feedback from the Treasury during the policy formation process, will damage the perception of regulatory … Read more
HM Treasury
View details
6 Conclusion
Fifth Report - The Future Framewor…
It is not clear to what extent the Treasury wishes to implement activity-specific regulation.
It is not clear to what extent the Treasury wishes to implement activity-specific regulation. While the proposal is a key aspect of the Treasury’s future framework consultation, when we asked the Economic Secretary whether the Treasury The Future Framework for … Read more
Government Response
The government is considering the recommendations made by the Committee, alongside the responses to the Financial Services Future Regulatory Framework Review Consultation, which closed on 19 February 2021. The government … Read more
HM Treasury
View details
7 Recommendation
Fifth Report - The Future Framewor…
If done with a deft approach, there may be a role for activity-based principles or...
If done with a deft approach, there may be a role for activity-based principles or “have regards” to allow the Government to instruct the regulators, at a more micro level, how it wishes them to approach specific types of business … Read more
HM Treasury
View details
8 Conclusion
Fifth Report - The Future Framewor…
Regulating a company as a whole rather than by activity carried out should provide greater...
Regulating a company as a whole rather than by activity carried out should provide greater flexibility to regulators to respond to new activities as they develop, rather than needing new activity-specific principles or frameworks each time a new activity emerges. Read more
Government Response
The government is considering the recommendations made by the Committee, alongside the responses to the Financial Services Future Regulatory Framework Review Consultation, which closed on 19 February 2021. The government … Read more
HM Treasury
View details
9 Conclusion
Fifth Report - The Future Framewor…
We will only be able to conclude with more certainty on the merits or risks...
We will only be able to conclude with more certainty on the merits or risks of activity- based regulation once the Government provides more details on their proposals in its next consultation.
Government Response
The government is considering the recommendations made by the Committee, alongside the responses to the Financial Services Future Regulatory Framework Review Consultation, which closed on 19 February 2021. The government … Read more
HM Treasury
View details
10 Conclusion
Fifth Report - The Future Framewor…
Decisions by the Financial Ombudsman Service set precedents and form a critical part of the...
Decisions by the Financial Ombudsman Service set precedents and form a critical part of the consumer conduct-focussed element of the regulatory environment for financial services in the UK. Given that the aim of the Treasury’s consultation is to create a … Read more
Government Response
The Committee’s report outlined concerns that where the Financial Ombudsman is making decisions which go against regulatory principles there should be some right of challenge for those the decision goes … Read more
HM Treasury
View details
11 Conclusion
Fifth Report - The Future Framewor…
If Parliament itself is to play a role in the setting the regulatory principles of...
If Parliament itself is to play a role in the setting the regulatory principles of the FCA, it needs to be satisfied that the principles which it has set the FCA are not being undermined by decisions by the Financial … Read more
Government Response
The Committee’s report outlined concerns that where the Financial Ombudsman is making decisions which go against regulatory principles there should be some right of challenge for those the decision goes … Read more
HM Treasury
View details
12 Conclusion
Fifth Report - The Future Framewor…
We believe that a measure of “ex-ante” scrutiny by Parliament is necessary.
We believe that a measure of “ex-ante” scrutiny by Parliament is necessary. But we do not believe that it would be proportionate for Parliament or its committees to carry out, as a necessary part of the rule-making process, the detailed … Read more
Government Response
Third, I welcome the Committee’s recommendation that a ‘targeted approach’ to scrutiny by Select Committees is the appropriate model for Parliamentary scrutiny of regulator activity, whereby the Committee should scrutinise … Read more
HM Treasury
View details
13 Conclusion
Fifth Report - The Future Framewor…
We believe that effective scrutiny of regulatory proposals should be carried out through a targeted...
We believe that effective scrutiny of regulatory proposals should be carried out through a targeted approach. Each new proposal made by the Financial Conduct Authority or by the Prudential Regulatory Authority under the future financial services regulatory framework would be … Read more
Government Response
Third, I welcome the Committee’s recommendation that a ‘targeted approach’ to scrutiny by Select Committees is the appropriate model for Parliamentary scrutiny of regulator activity, whereby the Committee should scrutinise … Read more
HM Treasury
View details
14 Conclusion
Fifth Report - The Future Framewor…
We have set out above reasons why we do not believe that Parliament or its...
We have set out above reasons why we do not believe that Parliament or its committees need necessarily carry out detailed and comprehensive textual scrutiny for every new draft regulation or rule, although it would always be open to a … Read more
Government Response
Third, I welcome the Committee’s recommendation that a ‘targeted approach’ to scrutiny by Select Committees is the appropriate model for Parliamentary scrutiny of regulator activity, whereby the Committee should scrutinise … Read more
HM Treasury
View details
15 Conclusion
Fifth Report - The Future Framewor…
We do not see a clear need for the creation of a new committee or...
We do not see a clear need for the creation of a new committee or a new independent body to carry out this work. It would seem a more efficient use of Parliamentary resources to use the structures that are … Read more
Government Response
Finally, while I note the Committee’s conclusion that they do not see a clear need for the creation of a new committee or a new independent body, I would also … Read more
HM Treasury
View details
16 Conclusion
Fifth Report - The Future Framewor…
The creation of a new independent body to assess whether regulators were fulfilling their statutory...
The creation of a new independent body to assess whether regulators were fulfilling their statutory objectives would not remove the responsibility of this Committee to hold the regulators to account, and it would also add a further body to the … Read more
Government Response
Finally, while I note the Committee’s conclusion that they do not see a clear need for the creation of a new committee or a new independent body, I would also … Read more
HM Treasury
View details
17 Conclusion
Fifth Report - The Future Framewor…
Our Committee has been consistent in its regular monitoring of the work of the Financial...
Our Committee has been consistent in its regular monitoring of the work of the Financial Conduct Authority and of the Prudential Regulatory Authority, the extent to which they meet the objectives set for them by Parliament, and their responsiveness to … Read more
Government Response
Finally, while I note the Committee’s conclusion that they do not see a clear need for the creation of a new committee or a new independent body, I would also … Read more
HM Treasury
View details
18 Conclusion
Fifth Report - The Future Framewor…
The House could, if it thought it necessary to increase the capacity and broaden the...
The House could, if it thought it necessary to increase the capacity and broaden the expertise of the Treasury Committee in order to undertake scrutiny of financial services, expand the facility under Standing Order No 137A(1)(e) for non-members of the … Read more
Government Response
Finally, while I note the Committee’s conclusion that they do not see a clear need for the creation of a new committee or a new independent body, I would also … Read more
HM Treasury
View details
19 Conclusion
Fifth Report - The Future Framewor…
The House might also consider increasing the resources available to the Committee if it were,...
The House might also consider increasing the resources available to the Committee if it were, as we anticipate, to expand its existing responsibility for the scrutiny The Future Framework for Regulation of Financial Services 29 of financial services. Although the … Read more
Government Response
Finally, while I note the Committee’s conclusion that they do not see a clear need for the creation of a new committee or a new independent body, I would also … Read more
HM Treasury
View details
20 Conclusion
Fifth Report - The Future Framewor…
We will continue to maintain an open mind as to how best to scrutinise the...
We will continue to maintain an open mind as to how best to scrutinise the significant flow of financial services proposals that will be made by the regulators, and we look forward to engaging constructively with the Government and with … Read more
Government Response
The government is considering the recommendations made by the Committee, alongside the responses to the Financial Services Future Regulatory Framework Review Consultation, which closed on 19 February 2021. The government … Read more
HM Treasury
View details
1 Conclusion Acknowledged
First Report - Future of financial…
The EU has reasons to be very prescriptive when setting its financial services rules: it...
The EU has reasons to be very prescriptive when setting its financial services rules: it must ensure that all member states are acting together and implementing the same rules consistently across multiple national legal systems. The UK, now that it … Read more
Government Response
The government acknowledges the committee's observation and emphasizes the importance of regulatory independence, referencing the Financial Services and Markets Act 2000 (FSMA) and the FRF Review, and the need for parliamentary oversight.
HM Treasury
View details
2 Conclusion Acknowledged
First Report - Future of financial…
Given that the UK has historically exercised significant influence in the framing of EU regulations,...
Given that the UK has historically exercised significant influence in the framing of EU regulations, the UK’s exit from the European Union should not in itself be the cause of instant or dramatic changes to financial services regulation in the … Read more
Government Response
The government notes the recommendation, reiterating that regulatory independence is at the heart of the UK’s financial services model and referencing the FRF Review's proposal for a comprehensive FSMA model, balanced with effective policy input and oversight from Parliament and government.
HM Treasury
View details
3 Conclusion Acknowledged
First Report - Future of financial…
The Treasury should respect the principle of regulatory independence, and must not pressure the regulators...
The Treasury should respect the principle of regulatory independence, and must not pressure the regulators to weaken or water down regulatory standards, or to accept changes to the regulatory framework which could impede the regulators’ ability to achieve their primary … Read more
Government Response
The government acknowledges the importance of regulatory independence and highlights measures in the FSM Bill to increase regulator accountability to Parliament and strengthen their relationship with the Treasury.
HM Treasury
View details
4 Conclusion Acknowledged
First Report - Future of financial…
We will remain alert for any evidence that regulators are coming under undue pressure from...
We will remain alert for any evidence that regulators are coming under undue pressure from the Treasury to inappropriately weaken regulatory standards.
Government Response
The government states that regulatory independence has been at the heart of the UK’s domestic model of financial services regulation for over two decades, and this remains central to the government’s approach.
HM Treasury
View details
5 Conclusion Accepted
First Report - Future of financial…
Deregulation or simplification will in themselves impose costs on industry in the short term.
Deregulation or simplification will in themselves impose costs on industry in the short term. Regulators should make every effort to limit the costs of compliance with the rules, for example by communicating planned changes in advance, grouping sets of changes … Read more
Government Response
The FCA seeks to balance costs imposed on firms with delivering a strong system of regulation, prioritises work based on evidence of consumer harm or risks to market integrity, and makes use of cost benefit analysis and post-implementation reviews.
HM Treasury
View details
6 Conclusion Acknowledged
First Report - Future of financial…
The UK’s exit from the European Union has had an impact on the UK’s ability...
The UK’s exit from the European Union has had an impact on the UK’s ability to export financial services to the EU. However, it remains the case that the UK still has many competitive strengths as a global financial services … Read more
Government Response
The government acknowledges the impact of Brexit on financial services exports but notes the UK's competitive strengths and the focus on competitiveness. It highlights tools for market access, regulatory cooperation, equivalence regimes, and FTAs.
HM Treasury
View details
7 Recommendation Acknowledged
First Report - Future of financial…
There is a clear view from the financial services sector that co-operation between regulators is...
There is a clear view from the financial services sector that co-operation between regulators is more significant than trade deals for ensuring reciprocal market access for financial services. While trade deals can open up new markets for financial services, the … Read more
Government Response
The government notes the recommendation. The UK has a range of tools to pursue new market access opportunities and closer regulatory cooperation in financial services with key international partners. The government works closely with the regulators to achieve progress. The government also operates a range of equivalence regimes and uses this as part of its range of tools to support the openness of the UK’s international financial services and facilitate cross border market access.
HM Treasury
View details
8 Recommendation Accepted
First Report - Future of financial…
We recommend that there should be a secondary objective for both the Financial Conduct Authority...
We recommend that there should be a secondary objective for both the Financial Conduct Authority and the Prudential Regulation Authority to promote long-term economic growth. The wording will be crucial: pursuing international competitiveness in the short term is unlikely to … Read more
Government Response
The government has implemented new secondary objectives for the FCA and PRA to focus on medium to long-term growth and competitiveness, while maintaining high regulatory standards.
HM Treasury
View details
9 Conclusion Acknowledged
First Report - Future of financial…
In designing the new secondary objective, there should also be some consideration for the ways...
In designing the new secondary objective, there should also be some consideration for the ways in which financial services serve the ‘real economy’. The financial services industry can help deliver economic growth not simply by growing itself but also by … Read more
Government Response
The government notes the recommendation and states that new secondary objectives for the FCA and the PRA introduce a new focus within the regulatory framework on the medium to long-term growth and competitiveness of the UK economy.
HM Treasury
View details
10 Conclusion Acknowledged
First Report - Future of financial…
The Treasury should continue to reject any calls for a growth and/or competitiveness objective to...
The Treasury should continue to reject any calls for a growth and/or competitiveness objective to become a primary objective. This would increase any pressure on regulators to trade off competitiveness against resilience, and would undermine the regulators’ ability to deliver … Read more
Government Response
The government notes the recommendation and has implemented new secondary objectives for the FCA and PRA to focus on growth and competitiveness, while maintaining high regulatory standards.
HM Treasury
View details
11 Conclusion Acknowledged
First Report - Future of financial…
The regulations made by the FCA, and the manner in which it supervises and enforces...
The regulations made by the FCA, and the manner in which it supervises and enforces those regulations, could have a significant impact on financial inclusion. However a primary role of the FCA should not be to carry out social policy, … Read more
Government Response
The government notes that the FCA's objectives are already aligned with financial inclusion and does not consider a separate 'have regards' duty necessary.
HM Treasury
View details
12 Recommendation Accepted
First Report - Future of financial…
The FCA should make every effort to ensure that it is not designing or implementing...
The FCA should make every effort to ensure that it is not designing or implementing regulation in a way which could unreasonably limit the provision of financial services to consumers who might benefit from them. When placing new requirements on … Read more
Government Response
The government states that the FCA's existing objectives and regulatory principles are already well-aligned with financial inclusion objectives.
HM Treasury
View details
13 Recommendation Accepted
First Report - Future of financial…
We welcome the clearer acknowledgement that the FCA is working to support financial inclusion, and...
We welcome the clearer acknowledgement that the FCA is working to support financial inclusion, and we would urge the FCA to continue to do so. The FCA should provide an annual report to Parliament on the state of financial inclusion … Read more
Government Response
The government states that the FCA's existing objectives and regulatory principles are already well-aligned with financial inclusion objectives, and the government already publishes an annual report on financial inclusion.
HM Treasury
View details
14 Recommendation Deferred
First Report - Future of financial…
The Treasury and regulators should publish a forward-looking schedule of approximately when they expect each...
The Treasury and regulators should publish a forward-looking schedule of approximately when they expect each EU financial regulatory file to move across to the regulatory rulebooks, including timelines for consultation, and when they expect the overall project to conclude. This … Read more
Government Response
The government notes the recommendation and recognizes the need to set out further information on the process of moving from retained EU law to a comprehensive FSMA model, indicating that it expects to do so in due course.
HM Treasury
View details
15 Conclusion Acknowledged
First Report - Future of financial…
Regulatory independence is critical for the competitiveness and effectiveness of UK financial services regulation.
Regulatory independence is critical for the competitiveness and effectiveness of UK financial services regulation. The host of new accountability mechanisms proposed by the Treasury must be carefully reviewed in this light, to ensure that regulatory independence is not compromised. These … Read more
Government Response
The government is confident that the final package strikes the right balance between democratic accountability, regulatory agility, and regulatory independence and that the regulators will be responsible for operationalising the new accountability requirements set out in the Bill.
HM Treasury
View details
16 Recommendation Acknowledged
First Report - Future of financial…
The Treasury should be sparing in its use of the proposed power to require regulators...
The Treasury should be sparing in its use of the proposed power to require regulators to review their rules, and should not use it to implicitly require the regulators to consider a general ‘public interest’ requirement for rulemaking. Each use … Read more
Government Response
The government states that the power to require a regulator to review its rules is designed to be used only in exceptional circumstances where the Treasury considers that it is in the public interest.
HM Treasury
View details
17 Recommendation Acknowledged
First Report - Future of financial…
The Treasury has not set out the expected impact of this new power on regulatory...
The Treasury has not set out the expected impact of this new power on regulatory resources. In order to avoid imposing a significant burden on regulatory resources to conduct these reviews, and to safeguard regulatory independence, the Treasury should fund … Read more
Government Response
The government notes the recommendation that the Treasury funds reviews conducted under this power and states the FSM Bill includes a requirement for the Treasury to ‘have regard’ to the desirability of minimising the impact of a direction on the regulator’s other functions before directing the regulator to undertake a review.
HM Treasury
View details
18 Conclusion Accepted in Part
First Report - Future of financial…
We expect the regulators to prioritise changes where the cost for consumers is lowest in...
We expect the regulators to prioritise changes where the cost for consumers is lowest in comparison to the benefit. Regulators’ approaches to assessing the marginal impact of new policies is already well-developed. We therefore believe that the creation of a … Read more
Government Response
The government acknowledges concerns about regulators' cost-benefit analysis and proposes establishing CBA panels but does not agree that the panels would impact the regulators' independence.
HM Treasury
View details
19 Recommendation Accepted
First Report - Future of financial…
The information the FCA has made available on how it is performing against its service...
The information the FCA has made available on how it is performing against its service standards shows a deteriorating picture. The FCA has a reputation for being too slow in its authorisation work, and this will inevitably hold back British … Read more
Government Response
The FCA wrote to the Committee alongside the publication of their Annual Report and Operating Service Metrics and will keep the Committee updated on the progress made to reduce authorisation queues.
HM Treasury
View details
20 Recommendation Acknowledged
First Report - Future of financial…
The FCA should consider how to improve its engagement with the poorest consumers, including seeking...
The FCA should consider how to improve its engagement with the poorest consumers, including seeking opportunities to improve the availability of data about people who are on the lowest incomes. The FCA must seek data on the issues vulnerable consumers … Read more
Government Response
The FCA contributes to HM Treasury’s yearly report on financial inclusion and supports the Government’s leadership on this issue and is willing to discuss with the Government how any additional duty to report on their part could avoid duplication and provide benefit to those who need support the most.
HM Treasury
View details
21 Conclusion Acknowledged
First Report - Future of financial…
We will conduct scrutiny of the Prudential Regulation Authority’s ‘Strong and Simple Framework’ proposals.
We will conduct scrutiny of the Prudential Regulation Authority’s ‘Strong and Simple Framework’ proposals. We will examine the impacts of the proposed reforms on the safety and soundness of smaller firms, and whether the reforms would successfully reduce the burden … Read more
Government Response
The PRA agrees that transferring retained EU law would allow for a comprehensive and efficient policy framework, and is committed to working with Treasury and other regulators on the process.
HM Treasury
View details
22 Recommendation Acknowledged
First Report - Future of financial…
In their review of Solvency II, the Treasury and Prudential Regulation Authority (PRA) should aim...
In their review of Solvency II, the Treasury and Prudential Regulation Authority (PRA) should aim to secure a robust insurance regulatory regime that adequately captures risk and incentivises investment in infrastructure and business, but one that is also appropriately tailored … Read more
Government Response
The government notes the recommendation, referencing its objectives for Solvency II reform which include a vibrant insurance sector, policyholder protection, and long-term capital support.
HM Treasury
View details
23 Recommendation Accepted in Part
First Report - Future of financial…
The Prudential Regulation Authority should consider where there is more that can be done to...
The Prudential Regulation Authority should consider where there is more that can be done to reduce the advantages from which large banks and insurers benefit through modelling their own capital requirements. The purpose of doing so would be not only … Read more
Government Response
The government agrees with simplifying the regulatory framework, citing the "Strong & Simple" initiative and insurance reporting simplifications, and highlights planned enhancements to cost-benefit analysis, but does not specifically address reducing advantages from modelling capital requirements.
HM Treasury
View details
24 Recommendation Accepted
First Report - Future of financial…
The FCA should investigate whether there are more opportunities to enable larger firms to undertake...
The FCA should investigate whether there are more opportunities to enable larger firms to undertake controlled, supervised experiments with innovative products. For example, it may be desirable to allow firms to be more experimental with the designs of new products, … Read more
Government Response
The FCA will explore using market innovation services to support more large firms in controlled testing of innovative products, with measured safeguards.
HM Treasury
View details
25 Conclusion Acknowledged
First Report - Future of financial…
There is a range of innovations taking place in payments systems and with alternative means...
There is a range of innovations taking place in payments systems and with alternative means of exchange, including crypto-assets, stablecoins, and central bank digital currencies. These innovations could provide opportunities to address weaknesses in international payments systems and potentially to … Read more
Government Response
The government notes the opportunities and risks with innovation, outlining steps to regulate stablecoins, cryptoasset activities, and consumer protection measures.
HM Treasury
View details
Government Response AI assessment · 25 of 13 classified
Accepted 6
Accepted in Part 2
Acknowledged 16
Deferred 1
Total 13 recs + 32 conclusions
Correspondence 5 letters
6 Sep 2022 To committee Letter from the Economic Secretary to the Treasury, relating to proposals for a “have regard” for financial inclusion for the Financial Conduct Authority, dated 25 July
Parliament page
25 Apr 2022 To committee Letter from the Economic Secretary to the Treasury, relating to the ‘Future of Financial Services’ session on 2 March regarding sanctions, dated 1 April
Parliament page
25 Apr 2022 To committee Letter from the Economic Secretary to the Treasury, relating to the ‘Future of Financial Services’ session on 2 March regarding financial services, dated 1 April
Parliament page
10 Mar 2022 To committee Letter from John Glen relating to sanctions following the Committee's evidence session on the ‘Future of financial services’, dated 4 March 2022
Parliament page
20 Oct 2021 To committee Letter from Lloyds following evidence given to TSC, regarding the future of financial services, dated 13 October 2021
Parliament page