Financial Services and Markets Bill

Our key asks

1. Strengthen regulators’ accountability. Given the regulators’ remits and powers are being expanded, we believe the Bill should address the lack of a suitable mechanism for those affected by regulation to challenge rules that are deficient. The Bill currently gives HM Treasury alone the power to require the regulators to review a rule that is not working as intended. We believe the ability to trigger a review of a regulatory rule should be extended to those affected by regulation, as designated by the Treasury, based on the existing ‘supercomplaint’ model.
2. Enable reform of the Consumer Credit Act 1974, This piece of legislation is unfit for the digital age. It constrains innovation and frustrates firms’ ability to act in their customers’ interests. We welcome the Government’s commitment to review the Act with a view to repealing it and giving full responsibility for regulating consumer credit to the Financial Conduct Authority (FCA). However, there needs to be a means of enacting these reforms. It is unlikely there will be another bill to enact the outcome of the review in this Parliament, and we therefore urge Parliament to use this Bill to give HM Treasury the powers to implement the outcomes of the CCA review once concluded. Not doing so would be a missed opportunity and prolong an unacceptable status quo unnecessarily.
3. Strengthen the position of the FCA in respect of decisions made by the Financial Ombudsman Service (FOS). The Treasury Committee identified the FOS’s handling of consumer complaints with wider implications as problematic in its a recent report. While the Bill as drafted requires the FCA, the FOS and the Financial Services Compensation Scheme to consult and coordinate with each other, we believe stronger requirements are needed to ensure the FCA’s ability to regulate coherently and that the FOS does not inadvertently act a quasi-regulator itself.
4. Deliver competitiveness: We strongly welcome the new secondary objective for competitiveness and growth that the Bill assigns to the FCA and the Prudential Regulation Authority. This will demonstrate that the UK is open for business and will give firms the confidence to invest for the future. A thriving, internationally competitive financial services sector provides hundreds of thousands of high-quality, well-paid jobs, lends to help businesses grow and contributes tax revenue for the public services on which we all rely. We urge Parliament to pass the new objective into law.

The reforms provided for by the Bill will benefit the industry, its customers and the wider country. We urge Parliament to pass the Bill without delay.

Future Regulatory Framework review

The Bill will implement the findings of HM Treasury’s Future Regulatory Framework (FRF) Review. Launched in light of Brexit, the FRF review has been a once in a generation assessment of the legislative framework in which the financial services regulators operate.

We have been heavily engaged in the review since its launch in 2019, deeming it an important opportunity to secure improvements to the way in which banking and finance is regulated.

Our views on the FRF review can be read in the following documents:

• Our response to HM Treasury’s phase-ii FRF consultation
• Our response to HM Treasury’s consultation on proposals for reform under the FRF
• Our response on the application of the FRF to the regulation CCPs and CSDs

APP Scams

The banking and finance industry is committed to stopping fraud happening in the first place, but for those who have lost money, banks have reimbursed millions of pounds to customers since the APP voluntary code was introduced. 

UK Finance and our members have long called for a regulated code, backed by legislation, to ensure consumer protections apply consistently. We therefore welcome the provisions in the Bill which provide for a mandatory liability framework for the reimbursement of victims of APP fraud.

The Payment Systems Regulator is currently consulting on the details of the liability framework. We will be responding to the consultation.

To find out more about the scale of the problem and what the industry is doing to tackle it, read our Annual Fraud Report 2022.

Wholesale Markets and Prospectus Regime reviews

The UK is a major hub for global wholesale markets. Companies from around the world come to the UK to manage risk and raise the capital they need to grow. Through the Wholesale Markets and Prospectus Regime reviews, the Government is taking advantage of the opportunity to refine and tailor retained EU law in these areas to meet the needs of the UK. Specific improvements will include enabling small businesses and retail investors to better access the crucial funding which UK capital markets provide, streamlining and simplifying requirements to make secondary markets more efficient for end-investors and customers, and delivering a more flexible and user-friendly Prospectus Regime, which will help UK-founded businesses to invest and grow and attract innovative companies from overseas by allowing them to raise cash and establish a foothold in the UK.  

By enacting these changes, the Bill will strengthen the UK as a leading global centre for financial services.   

Our views on these reviews are set out in:

• Our response to HM Treasury’s Wholesale Markets Review consultation
• Our response to HM Treasury’s Prospectus Regime consultation

Access to cash

The use of cash is declining in the UK, falling from over 50 per cent to only 17 per cent of all payments in 2020, and this has been accelerated by the pandemic. More people than ever are choosing to ‘go digital’ or use contactless when paying for goods and services. It is, however, important that those who want to use cash can do so.  

UK Finance, through the Cash Action Group (CAG), has been assessing cash needs across the country. In certain places this has led to new shared banking hubs, as well as other measures to preserve access.

The Bill contains provisions to give HM Treasury the power to designate firms for the purpose of ensuring continued access to cash across the UK. The Financial Conduct Authority (FCA) will be established as the lead regulator for retail cash access and will be given appropriate powers for ensuring that designated firms continue to provide deposit and withdrawal facilities across the UK. The FCA’s powers will allow it to address cash access issues at both a national and local level. We largely welcome these proposed measures, which, in conjunction with the work being carried out by the CAG, should ensure sustainable access to cash for those who continue to need it. 

HM Treasury will publish a Policy Statement setting out further details about the requirements on designated firms upon the Bill receiving Royal Assent

Read our response to HM Treasury’s consultation on Access to Cash for our detailed views on these issues.

Reform of the Consumer Credit Act 1974

A growing proportion of transactions now completely digital, and lenders are innovating rapidly to respond to shifting consumer preferences. The scale and pace of change is shown by the emergence of Buy Now, Pay Later products, now used by over 17 million customers in the UK.

We welcome the Government’s commitment to reform the Consumer Credit Act and give full responsibility for regulating consumer credit to the FCA. This will enable regulation to keep pace with changes in consumer behaviour. The Bill should enable those reforms to be implemented without delay.

Read our response to HM Treasury’s consultation on the regulation of Buy Now, Pay Later.