Second Report - Edinburgh Reforms One Year On: Has Anything Changed?
Select Committee
Treasury Committee
HC 221
8 December 2023
Government response
Second Special Report - Edinburgh Reforms One Year On: Has Anything Changed? Government Response to the Committee’s Second Report · published 21 Feb 2024
Recommendations & Conclusions
10 results
2
Conclusion
Not Addressed
Para 18
Economic growth best promoted by a strong, well-regulated, resilient financial services sector.
Conclusion
The Sub-Committee agrees with the Treasury that the UK’s regulators should consider economic growth when designing new regulations, and the best way to promote economic growth in the UK is through a strong, well respected, independently regulated, and financially resilient …
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Government Response Summary
The government's response rejects any suggestion that its reforms will not significantly impact the economy or could be delivered faster, affirming confidence that its current wide-ranging package is promoting growth and competitiveness, but it does not directly address the committee's supportive conclusion.
HM Treasury
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3
Conclusion
Not Addressed
Para 21
Concerns about risks of wider retail investment in Long-Term Asset Funds persist.
Conclusion
The Sub-Committee has raised concerns with the FCA about the risks to widening retail investment in Long-Term Asset Funds, since they are riskier non-liquid assets. These concerns are in part formed by our work looking into the failure of London …
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Government Response Summary
The government's response focuses on the Advice Guidance Boundary Review consultation to improve consumer access to affordable advice in the retail investment market, without directly addressing the specific concerns raised about Long-Term Asset Funds and protections against misuse of investor exemptions.
HM Treasury
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4
Conclusion
Para 23
Continued support for appropriate pension scheme consolidation remains the Committee's view.
Conclusion
In our July 2023 report on venture capital funding we concluded that we were in favour of pension scheme consolidation where appropriate. Our view has not changed since. We therefore restate our conclusion on pension scheme consolidation in this report:
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HM Treasury
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5
Conclusion
Para 24
Urge Government to urgently progress work on pension fund consolidation proposals.
Conclusion
Our evidence suggests that UK pension funds may be an untapped source for a deeper domestic capital market more inclined to risk investment in high-potential businesses. We welcome the Government’s announcement of work on pension fund consolidation in the autumn. …
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HM Treasury
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6
Recommendation
Not Addressed
Para 35
Continue monitoring market impact of the new consolidated tape by Government and regulators.
Recommendation
The Sub-Committee remains sceptical that a government-approved monopoly for providing data to market participants through a consolidated tape is good for competition. Once a monopoly were granted, the incumbent would have little incentive to reduce costs or to innovate. Given …
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Government Response Summary
The government notes that the Financial Conduct Authority (FCA) published rules for a UK consolidated tape for bonds, but does not directly address the recommendation to monitor its impact on market forces.
HM Treasury
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8
Conclusion
Para 42
Explore small changes to ring-fencing framework, but only remove with substantial evidence.
Conclusion
Based on the evidence the Sub-Committee has heard, there is the potential for small changes to the ring-fencing framework to improve its interoperability with the PRA’s resolution regime, but any longer-term plans to eventually remove the ring-fencing regime entirely should …
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HM Treasury
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9
Conclusion
Para 46
Continued viability of building societies and mutuals is vital for a strong financial sector.
Conclusion
The continued viability of building societies and mutuals is of high importance to the Committee. A diverse, competitive and vibrant financial services sector is strengthened by the presence of mutuals and building societies.
HM Treasury
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11
Conclusion
Significant problems identified within the PRIIPS regime and wider cost disclosures.
Conclusion
There is consensus among the Treasury, industry, and the Financial Conduct Authority that there are problems within the Packaged Retail and Insurance-based Investment Products (PRIIPS) regime in addition to a wider problem with cost disclosures. Such an example can be …
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HM Treasury
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17
Conclusion
Para 58
Duplication of work with proposed Lords Financial Services Regulation Committee must be avoided.
Conclusion
The Sub-Committee notes the proposed establishment of a Lord’s Committee on Financial Service Regulation. While its remit is a matter for the House of Lords, duplication of work should be avoided. The Sub-Committee will continue to carry out its scrutiny …
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HM Treasury
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18
Conclusion
Regulators' cost benefit analysis consistently fails to capture full costs for firms.
Conclusion
The Financial Services and Markets Act 2023 legislated for the creation of Cost Benefit (CBA) Panels dedicated to supporting the regulators in producing cost benefit analysis for each of their reforms. The Sub-Committee has consistently been of the view that …
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HM Treasury
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