COMMONS

Formal process to request changes to perimeter of regulation needed

17 October 2019

Its conclusions included:

  • Informal system for FCA requesting changes to regulatory perimeter from Treasury is insufficient
  • Current system allows grey area between regulated and non-regulated activities to be exploited
  • FCA needs formal power to recommend to Treasury changes to perimeter of regulation

Interim Chair's comments

The Committee published the Government’s response to the report last week. Commenting on the response, Catherine McKinnell MP, Interim Chair of the Treasury Committee, said:

“It was disappointing […] that the Government does not see the case for providing a formal power for the FCA to request changes to the perimeter.”

Comments from the FCA

In the FCA’s response, which the Committee received on 14 October and has published today, Andrew Bailey, Chief Executive of the FCA, said:

“[W]e share the Committee’s view that there could be a more structured and transparent approach for identifying and engaging with HMT on perimeter changes. This could allow for a regular opportunity to consider what activities are covered by regulation, and enhance transparency surrounding changes to the FCA regulatory perimeter.”

Commenting on the FCA’s correspondence, Ms McKinnell said:

“The Treasury Committee has recommended that the FCA is given the formal power to suggest changes to the Government over what it regulates, which could help the FCA to protect consumers.

“Disappointingly, yet perhaps unsurprisingly, the Government rejected our recommendation, opting instead to keep the opaque system as it is.

“The independent FCA, on the other hand, shares our view, rather than the Government’s, that a more formal or structured approach would provide greater transparency to the process.

“The Committee awaits the work promised by both the FCA and the Government, and we will continue to raise these issues in our evidence sessions.”

Further information

Image: PA

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