Fifth Report - The Future Framework for Regulation of Financial Services
Select Committee
Treasury Committee
HC 147
6 July 2021
Government response
Fourth Special Report: The Future Framework for Regulation of Financial Services: Responses to the Committee’s Fifth Report · published 20 Sep 2021
Recommendations & Conclusions
20 results
1
Recommendation
Acknowledged
Para 27
We agree with the Treasury that the body of EU financial services rules that was...
Recommendation
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 …
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Government Response Summary
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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2
Conclusion
Not Addressed
Para 28
The Treasury consultation alluded to certain UK-derived rules that are set out in UK statute,...
Conclusion
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 …
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Government Response Summary
The government noted the committee's view on EU on-shored law but did not directly address the conclusion regarding whether domestically-derived rules need to be included in the exercise of moving rules out of statute.
HM Treasury
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3
Recommendation
Not Addressed
Para 36
We understand the need for Treasury Ministers to be well informed of the regulators’ policy...
Recommendation
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 …
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Government Response Summary
The government acknowledges the Committee's concerns that its proposals might damage regulatory independence, affirming the importance of independence and the need for balance. However, the response does not explicitly commit to refraining from changing the law as recommended.
HM Treasury
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4
Recommendation
Not Addressed
Para 37
The Treasury has in the past been able to delay policies in the interests of...
Recommendation
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 …
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Government Response Summary
The government acknowledges the Committee's concerns that its proposals might damage regulatory independence, affirming the importance of independence and the need for balance. However, the response does not explicitly commit to refraining from legislating for increased Treasury power.
HM Treasury
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5
Recommendation
Not Addressed
Para 38
If the Treasury does wish to give itself the formal power to see policy proposals...
Recommendation
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 Summary
The government acknowledges the committee's concerns about regulatory independence but does not address the specific recommendation to publish the Treasury's comments or suggested changes to policy proposals alongside public consultations.
HM Treasury
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6
Conclusion
Deferred
Para 49
It is not clear to what extent the Treasury wishes to implement activity-specific regulation.
Conclusion
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 …
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Government Response Summary
The government is considering the committee's conclusions alongside consultation responses and will bring forward detailed proposals in a second consultation in the autumn, thus deferring a detailed response.
HM Treasury
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7
Recommendation
Deferred
Para 50
If done with a deft approach, there may be a role for activity-based principles or...
Recommendation
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 …
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Government Response Summary
The government defers a detailed response, stating it is considering the recommendations alongside consultation responses, and will bring forward detailed proposals in a second consultation in the autumn.
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8
Conclusion
Deferred
Para 51
Regulating a company as a whole rather than by activity carried out should provide greater...
Conclusion
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.
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Government Response Summary
The government is considering the committee's recommendations alongside consultation responses and will bring forward detailed proposals in a second consultation in the autumn, thus deferring a detailed response.
HM Treasury
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9
Conclusion
Deferred
Para 52
We will only be able to conclude with more certainty on the merits or risks...
Conclusion
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 Summary
The government states it is considering the recommendations and will bring forward detailed proposals in a second consultation in the autumn, therefore deferring a detailed response until then to avoid prejudging the consultation.
HM Treasury
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10
Recommendation
Acknowledged
Para 56
Decisions by the Financial Ombudsman Service set precedents and form a critical part of the...
Recommendation
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 …
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Government Response Summary
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
If Parliament itself is to play a role in the setting the regulatory principles of...
Conclusion
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 …
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Government Response Summary
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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12
Conclusion
Accepted
We believe that a measure of “ex-ante” scrutiny by Parliament is necessary.
Conclusion
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 …
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Government Response Summary
The government welcomes the committee's recommendation for a 'targeted approach' to parliamentary scrutiny of regulator activity, agreeing that it is a more appropriate model than detailed textual scrutiny.
HM Treasury
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13
Conclusion
Acknowledged
Para 78
We believe that effective scrutiny of regulatory proposals should be carried out through a targeted...
Conclusion
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 …
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Government Response Summary
The government welcomes the Committee's recommendation for a targeted approach to Parliamentary scrutiny of regulator activity, agreeing that it is an appropriate model.
HM Treasury
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14
Conclusion
Acknowledged
Para 85
We have set out above reasons why we do not believe that Parliament or its...
Conclusion
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 …
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Government Response Summary
The government welcomes the Committee's recommendation that a targeted approach is the appropriate model for Parliamentary scrutiny of regulator activity.
HM Treasury
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15
Conclusion
Acknowledged
Para 86
We do not see a clear need for the creation of a new committee or...
Conclusion
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 …
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Government Response Summary
The Government notes the Committee's conclusion but states that the appropriate scrutiny structure for Parliament is a matter for Parliament itself to consider.
HM Treasury
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16
Conclusion
Acknowledged
Para 87
The creation of a new independent body to assess whether regulators were fulfilling their statutory...
Conclusion
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 …
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Government Response Summary
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.
HM Treasury
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17
Conclusion
Not Addressed
Para 88
Our Committee has been consistent in its regular monitoring of the work of the Financial...
Conclusion
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 …
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Government Response Summary
The Government's response states that the structure for scrutiny is a matter for Parliament, which does not directly address the Committee's conclusion about the logic of aligning scrutiny of regulations and policy implementation.
HM Treasury
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18
Recommendation
Deferred
Para 91
The House could, if it thought it necessary to increase the capacity and broaden the...
Recommendation
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 …
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Government Response Summary
The government notes the committee's conclusion and reiterates that the appropriate structure for parliamentary scrutiny, including expanding committee facilities, is a matter for Parliament itself to consider.
HM Treasury
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19
Conclusion
Deferred
Para 92
The House might also consider increasing the resources available to the Committee if it were,...
Conclusion
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 …
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Government Response Summary
The government redirected the recommendation, stating that the appropriate structure for parliamentary scrutiny is a matter for Parliament itself to consider.
HM Treasury
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20
Conclusion
Deferred
We will continue to maintain an open mind as to how best to scrutinise the...
Conclusion
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 …
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Government Response Summary
The government deferred a detailed response, stating it is considering the committee's views alongside an ongoing consultation and will bring forward detailed proposals in a second consultation in the autumn, not wishing to pre-judge it.
HM Treasury
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