UK Committee Recommends Enhancing the Financial Conduct Authority's Powers and Remit
08/02/2019The U.K. Treasury Committee has published a report on the Financial Conduct Authority's perimeter of regulation. The Report is part of the Committee's ongoing inquiry, The Work of the Financial Conduct Authority, which is considering: (i) the timeliness in which the FCA is able to take action; (ii) the transparency of the FCA's work and decisions; and (iii) the scope of the FCA's regulatory perimeter. This Report considers the last of these issues and makes several recommendations to the Treasury on the remit and powers of the FCA to enhance understanding of consumers of the regulatory perimeter, reduce harm to consumers and mitigate against regulatory arbitrage. The recommendations include:
- Introducing rules requiring regulated firms to provide explicit warnings when they undertake unregulated activities, including providing an explanation of the potential consequences of entering into those unregulated activities with the firm;
- Giving the FCA a formal power to make recommendations to HM Treasury on changes of the regulatory perimeter and requiring the recommendations and Treasury's response to them be publicly disclosed;
- Including within the FCA's remit, the responsibility for providing warnings on financial products that might cause consumer harm, including any activities or products that are outside of its regulatory perimeter; and
- Granting the FCA powers to request information from unregulated entities.
The Committee proposes that the Treasury conducts research on the impact of the last recommendation and provides a response to the recommendation.
Noting that HM Treasury has launched its Financial Services Future Regulatory Framework Review, the Committee recommends that should HM Treasury decide not to grant the FCA further powers and not to extend the FCA's regulatory remit, HM Treasury must acknowledge that it has retained those responsibilities and should report annually on its work to monitor the perimeter of regulation, the risks that have arisen outside of the perimeter and its steps to mitigate against consumer harm.
View the report.
View details of HM Treasury's first consultation under the Financial Services Future Regulatory Framework Review.
View details of the FCA's first annual perimeter report.
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