UK Government Responds to Committee Report on Conduct Authority's Perimeter of Regulation
10/10/2019The U.K. government has published a response to the Treasury Committee's report on the Financial Conduct Authority's perimeter of regulation. The Committee's Report is part of its 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.
The Committee made several recommendations to HM Treasury on the remit and powers of the FCA to enhance the understanding of consumers of the regulatory perimeter, reduce harm to consumers and mitigate against regulatory arbitrage. The Government has responded to the recommendations, including the following:
- On the recommendation for rules to be introduced requiring regulated firms to provide explicit warnings when they undertake unregulated activities, the government points out that the Financial Promotions regime is designed to ensure that consumers receive information on the risks. However, the government is considering, with the FCA, whether the Financial Promotions regime, and other related rules, should be enhanced as part of the review into the failure of London Capital & Finance. The outcome of the review will be announced in due course.
- On 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, the government notes that the FCA already has these powers and regularly draws attention to issues arising outside of the regulatory perimeter.
- On 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 to be publicly disclosed, the government states that any changes to the regulatory perimeter are a matter for Ministers, with the approval of Parliament, to decide.
View the Government's response.
View details of the Committee's report.
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