Financial services policy agenda

A responsibly managed and well-regulated financial services sector is essential to the success of the British economy. The Chancellor outlined the financial services policy agenda in his June 2010 Budget and Mansion House speeches. This includes: abolishing the Financial Services Authority (FSA) and transferring its prudential supervisory powers to the Bank of England;
establishing a macro-prudential authority, the Financial Policy Committee (FPC) (within the Bank of England) to monitor and respond to systemic risks;
transferring responsibility for prudential regulation to a focused new regulator, the Prudential Regulation Authority (PRA) established as a subsidiary of the Bank of England; and
establishing a focused new conduct of business regulator the Financial Conduct Authority (FCA) to ensure that business across financial services and markets is conducted in a way that advances the interests of all users and participants.

The Financial Services Bill was introduced into Parliament on 26th January to implement these reforms. Alongside introduction the Government has published a policy document which outlines the latest developments in policy as well as the Government’s formal responses to the Joint Committee for the Draft Financial Services Bill’s pre-legislative scrutiny report , and the Treasury Select Committee’s report on Bank of England governance and accountability.

The document also contains a summary of consultation responses received to the White Paper and draft Bill published in June 2011 (all consultation responses, except those where confidentiality has been requested, are separately published in the consultation area of this website).

View the Government’s consultations on new approaches to financial regulation, as well as the responses.

June 2011- The blueprint for reform
July 2010 - Reforming the consumer credit regime

In addition to the program of domestic regulatory reform, the Government is also:

creating a new Economic Crime Agency – bringing together the work of various Government agencies into a single powerful force to tackle crime
helping small and medium sized businesses (SMEs) having difficulty accessing finance.
introducing a bank levy so that banks make a fair contribution in respect of the potential risk they pose – a joint statement announced similar levies in France and Germany.
making progress on banking sector reform. The government has considered the recommendations of the Independent Commission on Banking chaired by Sir John Vickers - set up to investigate the structure and competition of UK banks and publishedits response to the recommendations on 19 December 2011.

The Government broadly accepted the Commission’s recommendations, including those on ring-fencing, loss-absorbency, resolvability (of banks and investment banks), competition, and the regulation of payment systems. The Government has also agreed to the ICB’s recommended implementation timetable, and will bring forward legislation in this Parliament, so that the measures will be in place by 2019.

Further information can be found in the Independent Commission on Banking section of this website

In addition, in the Spending Review (November 2010), the Chancellor underlined the Government’s commitment to ensuring that the banking sector has in place strong governance around taxation. The Chancellor made clear that he expected the banking sector to comply with the Code of Practice on Taxation by the end of November 2010. All 15 of the major UK banks have since signed up.

The Code encourages banks to adopt ‘best practice’ in relation to their tax affairs, and takes a preventative approach to tax avoidance. While recognising that banks should undertake appropriate tax planning to support their business needs, the Code makes clear that the outcome of tax planning should not run contrary to the intentions of Parliament.

The Chancellor announced the details of Project Merlin in February 2011. The UK’s top banks have committed to:

Lend more to businesses (especially SMEs) this year than last: £190 billion of new credit, up from £179 billion in 2010.
The pay of each bank’s CEO and senior managers will be linked to performance against the SME lending commitments.
Pay out lower bonuses than last year.
World-leading disclosure arrangements, with the pay of senior executive officers being published annually, making them more accountable to their stakeholders;
Make a £1.2 billion contribution to the Business Growth Fund and the Big Society Bank.

The Government also continues to engage and influence strongly at an international level with EU and G20 counterparts – representing the interests of the UK to shape future financial services regulation and provide the foundation for a healthy and sustainable macroeconomy. The Government is committed to playing a full part in the global reform effort, while proceeding as quickly as possible with establishing a new regulatory framework in the UK.

Financial services policy agenda

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Financial services policy agenda

Financial services sectors

Speeches about financial regulation