We are currently going through the Financial Services and Markets Bill clause by clause, line by line, debating the principles, highlighting the concerns and suggesting changes. On the third day of Committee Stage (1st February 2023) I introduced four amendments, all with the intention of improving transparency, accountability, efficiency and proportionality for the regulators.
Amendment 115 would require both regulators to publish regular reports to Parliament on their regulatory performance for new applicants for regulation. Amendment 116 would require the FCA to publish regular reports to Parliament on their regulatory performance for existing authorised entities and persons and amendment 196 would add to the regulators’ authorisation KPIs within the Financial Services and Markets Act 2000 and require them to publish monitoring data related to the determination of authorisations. Amendment 74 would amend the existing regulatory principle for both regulators and require that the nature of and risk to the consumer, and the service or product being delivered, must be taken into account when imposing a new burden or restriction
Text of video: “Because what we are really talking about here is the time and the cost to firms and prospective firms and we need a lot more transparency and clarity and115 and 116 are focussed in that direction. Amendment 196 looks to reporting on determinations and there have been significant concerns raised across the industry on this issue, can I point my noble friend the Minister to the joint report the City Corporation and HMT did on the state of the sector and would she agree with the conclusions that that report came to in terms of declining levels of responsiveness and the need for the regulator to up their game in this respect.”
Lord Holmes of Richmond, House of Lords, 1st February 2023
The full text of all four amendments is below:
115
Insert the following new Clause—
“Requirement to publish regulatory performance information on new authorisations
(1) The FCA and PRA must each lay before each House of Parliament a report on their regulatory performance as soon as practicable after the end of— (a) the period of six months beginning with the day on which this Act is passed, and (b) subsequently, each quarter.
(2) The reports must include analysis and data on the following— (a) the total number of new applications for authorisation made to each regulator each year, and a breakdown by authorisation type; (b) the rates of approval for applications for authorisation by each regulator and a breakdown by authorisation type; (c) the average length of time taken from application to final authorisation decision by each regulator; (d) an estimate of the time and costs required by an applicant to comply with information requirements for authorisation; (e) such other matters as the Treasury may from time to time direct.”
116
Insert the following new Clause—
“Requirement to publish regulatory performance information on authorised firms (1) The FCA must lay before each House of Parliament a report on its regulatory performance as soon as practicable after the end of— (a) the period of 6 months beginning with the day on which this Act is passed, and (b) subsequently, each quarter.
(2) The report must include the average length of time taken from application to final decision for each of the following regulatory responsibilities— (a) approved persons; (b) change in control; (c) variation of permission; (d) waivers and modifications that alter compliance obligations.”
196
Insert the following new Clause—
“Determination of applications
(1) FSMA 2000 is amended as follows.
(2) In section 61 (determination of applications), after subsection (2) insert—
“(2ZA) In determining the application, the regulator must— (a) assign a new application to a case handler within 5 working days of the application being made, (b) complete an initial application review within 10 working days of allocation to a case handler, and (c) allow a period of no more than 15 working days from receiving the application, to make requests for additional information. (2ZB) The regulators must publish monitoring data on an annual basis regarding the following— (a) the proportion of cases which required escalation to sponsoring firms, including summary trend data on the reasons for escalation, (b) the average time it takes to assign a case handler, and (c) the average number of days it takes to complete an application in full.””
74
After Clause 26
Insert the following new Clause—
“Regulatory principles to be applied by both regulators: proportionality principle In section 3B(1) of FSMA 2000 (regulatory principles to be applied by both regulators), in paragraph (b), for the words from “considered” to the end of that paragraph substitute “taking into consideration the nature of the service or product being delivered, the nature of risk to the consumer, whether the cost of implementation is proportionate to that level of risk and whether the burden or restriction enhances UK international competitiveness;”.”
We now have to wait and see if the government will take any of these suggestions forward. I see only positive outcomes if they do. Increased accountability, proportionality, efficiency, effectiveness, responsiveness: our financial services regulators enabled, independent and accountable, ready to further develop their reputation domestically and internationally.
To conclude, at this Committee Stage at least, we have in front of us a Bill with so much potential. Potential for folks and firms alike if we get it right. As is often the case, at this stage of the legislative process, there is much to be done, amended, improved. Not least, in terms of regulation and the regulators there are questions around accountability, cost, and the competitiveness objective.
If we are to gain all of the opportunities and potential benefits of our financial services sector, the new technologies we have in our human hands, all connected through the power and certain positive force of the common law of England and Wales then we have to make this a Bill that delivers on its promise. We can and we must.
Wait, so who’s watching the watchdog? (cityam.com)
I ask for a second time: Who watches the watchdog? (cityam.com)
Who watches the watchdog? “Quis custodiet ipsos custodes?” Part III (cityam.com)