On 11 March 2020, HM Treasury published its response to a call for evidence on the coordination between UK financial services regulators by the UK government. The call for evidence is part of the Financial Services Future Regulatory Framework Review (Review), which was launched in July 2019 and aims to assess how the UK regulatory landscape should adapt in the following years to ensure it remains fit for purpose.
The Review is divided into two phases. In first phase, the Treasury will examine issues in coordination between UK financial services regulators and how this can be improved. The second phase will focus on broader issues relating to the future UK regulatory framework, particularly in light of the UK’s withdrawal from the EU. This will form part of the Government’s White Paper on financial services which is due to be published in Spring 2020.
Stakeholder feedback
The Treasury response to the review published views expressed by industry participants in response to the Review call for evidence. Stakeholders generally suggested that coordination between UK regulators could be improved. More specifically, respondents pointed out that the cumulative impact of different regulations can be resource intensive for firms. This is particularly the case when new regulatory requirements, data requests and consultations all coincide at the same point in time. To address this issue, some respondents suggested that the increased use of regulatory technology (RegTech) solutions may help in streamlining supervision. Overall, respondents expressed the view that regulatory activities should not result in a duplication of actions or overlapping requirements for firms.
Regulatory coordination
In the coming months, HM Treasury will roll-out the following initiatives to ensure that regulatory coordination is more effective and efficient:
- Regulatory initiatives Grid (the Grid) – the Grid, which will be launched during the Summer, will aim to provide market participants with an indicative two-year forward overview of major upcoming regulatory initiatives in the financial services sector. This will enable firms to anticipate and be better prepared for upcoming changes.
- Financial Services Regulatory Initiatives Forum (the Forum) – the Forum will manage and coordinate the Grid. Members will include the Bank of England, the Prudential Regulation Authority, the Financial Conduct Authority, the Payment Services Regulator and the Competition and Markets Authority. The Treasury will be an observer member. Individuals members will have the power to alter the timing of regulatory initiatives, where appropriate. Other regulators, such as the Information Commissioner’s Office will be called in on an ad hoc basis, as necessary.
The impact of Brexit
According to HM Treasury, the UK will look to take advantage of the global opportunities presented by its new position outside of the EU. In this regard, it was highlighted that it is important that regulatory action supports the ability of firms to serve their customers and to remain competitive in the global markets.
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