Government publishes Financial Services Bill
The Government has today published legislation which will fundamentally transform and strengthen financial regulation in the United Kingdom.
The Government has today published legislation which will fundamentally transform and strengthen financial regulation in the United Kingdom, Financial Secretary to the Treasury, Mark Hoban, has announced. The new regime sets out a clear, coherent and comprehensive regulatory framework, replacing the uncertainty and inadequacy of the previous structure, and helping to mitigate against future risks to stability.
The Bill:
- Gives the Bank of England responsibility for protecting and enhancing financial stability, bringing together macro and micro prudential regulation;
- Abolishes the Financial Services Authority (FSA) and creates a strengthened regulatory architecture consisting of the Financial Policy Committee, the Prudential Regulation Authority and the Financial Conduct Authority, also providing them each with clarity of responsibility and the necessary powers to ensure the stability of the financial sector and the protection of consumers; and
- Empowers authorities to look beyond ‘tick-box’ compliance and fosters a regulatory culture of judgment, expertise and proactive supervision.
- Today’s Bill has been shaped by extensive consultation with both stakeholders and Parliament and, while the fundamental elements of the new framework are in line with the model put forward by the Chancellor in 2010, contains a number of refined policy proposals, including measures to:
- Legislate for a new crisis management regime, providing greater clarity and accountability to protect the taxpayer during times of crisis by providing the Chancellor with new powers over the Bank of England where public money is at risk; and
- Enables the transfer of responsibility for regulating consumer credit to the Financial Conduct Authority to better protect consumers.
Mr Hoban said:
This Government has taken the necessary action to tackle the difficult and dangerous legacy left behind by the financial crisis, including a tripartite structure not fit for purpose. We’ve listened to the views of stakeholders following an unprecedented period of consultation, and are determined to strengthen the financial system in a way that safeguards financial stability and protects consumers.
Notes for editors
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In his Mansion House speech on 15 June 2010, the Chancellor of the Exchequer, George Osborne MP, outlined the Government’s plans for reforming the regulatory system, including the creation of an independent Financial Policy Committee at the Bank of England, a new prudential regulator as a subsidiary of the Bank (the Prudential Regulatory Authority), and a new independent conduct regulator (the Financial Conduct Authority).
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Today’s Government White Paper and draft Bill follows three detailed consultations. In July 2010, the Government published ‘A new approach to financial regulation: judgement, focus and stability’.
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In February 2011, the Government published ‘A new approach to financial regulation: building a strong system’.
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In July 2011, the Government published ‘A new approach to financial regulation: the blueprint for reform’, which included draft legislation.
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Pre-legislative scrutiny took place from July to December, and offered further opportunity for stakeholders and Parliamentarians to engage with and improve the Bill prior to today’s formal introduction to Parliament.
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Second Reading of the Bill is provisionally scheduled to take place on 6 February, and Royal Assent is sought by the end of the year.
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The Bill and accompanying documents can be found on the Treasury website.