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
19 Recommendations
26 Conclusions
3 Reports
5 Letters
9 Events
Activity timeline 10 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
20 Oct
2021
Correspondence
20 Sep
2021
Report published
6 Jul
2021
Report published
Recommendations & Conclusions
23 results
Clear
1 Recommendation Acknowledged
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
The government notes the Committee's view on moving EU financial services law to regulators' rulebooks and reaffirms its own proposed approach. It does not explicitly address the recommendation for providing required resources.
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10 Recommendation Acknowledged
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 government acknowledged the recommendation, stating that they and the Ombudsman Service are currently considering whether any changes to existing arrangements are needed to ensure fair redress and awareness of wider implications.
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11 Conclusion Acknowledged
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 government acknowledges the concern that Financial Ombudsman Service decisions should not undermine regulatory principles. They are currently considering whether any changes to existing arrangements are needed to ensure fair redress.
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13 Conclusion Acknowledged
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
The government welcomes the Committee's recommendation for a targeted approach to Parliamentary scrutiny of regulator activity, agreeing that it is an appropriate model.
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14 Conclusion Acknowledged
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
The government welcomes the Committee's recommendation that a targeted approach is the appropriate model for Parliamentary scrutiny of regulator activity.
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15 Conclusion Acknowledged
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
The Government notes the Committee's conclusion but states that the appropriate scrutiny structure for Parliament is a matter for Parliament itself to consider.
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16 Conclusion Acknowledged
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
The government notes the committee's conclusion that a new independent body for assessing regulators is not needed, and reiterates that parliamentary scrutiny structure is a matter for Parliament.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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
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Government Response AI assessment · 45 of 19 classified
Accepted 7
Accepted in Part 2
Acknowledged 23
Deferred 8
Not Addressed 5
Total 19 recs + 26 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 financial services, 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 sanctions, 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