Financial Services Reform Mapped out with New Bill
The government has published a new financial services regulation roadmap laying out how consumer protection will be bolstered with a long-awaited white paper and draft bill.
Both are based on feedback from the financial services industry following prolonged consultation with banks, insurance providers and professional trade and regulatory bodies.
The new policy is based on three three key proposals:
- A specific statutory objective governing the new Prudential Regulation Authority’s (PRA)responsibilities for the insurance sector
- Revised and upgraded competition rules managed by the Financial Conduct Authority (FCA)
- Better protection against consumer bad practice, like misselling
Launching the white paper, Financial Secretary to the Treasury Mark Hoban MP said: “This is a key milestone in the process of developing and implementing a new system of financial regulation, which will address the flaws in the ‘tripartite’ model that contributed to the financial crisis. This is a detailed blueprint for regulatory reform setting out how the new structure will work.
“This government is determined to strengthen the financial system and to do so in a way that gets it right – that’s why we’ve worked hard to consult with a wide-range of stakeholders over the last year. We look forward to working with stakeholders and Parliament during the period of pre-legislative scrutiny.”
The bill is welcomed by financial services trade bodies – but further clarification is sought about how the PRA and FCA will work together to ensure no gaps or duplication in responsibilities.
Otto Thoresen, Director General, Association of British Insurers said: “It is good news that the government has recognised that insurance must be given proper consideration in the new regulatory structure. This is something we have been calling for, and we are pleased that there will be a distinct insurance industry objective built into prudential regulation.
We are also pleased that the FCA will have to promote competition, as this is the something that the industry had raised concerns about. We had hoped for more substantive proposals about exactly how the Financial Ombudsman Service will work with the FCA, so we look forward to consulting further with the Government on this important point.”
“There will need to be clear detail about how the PRA and FCA should work together to make sure there is no overlap, gaps or confusion if we are all to make this work.”