The government says it will reform the rules regulating the UK’s capital markets to promote investment post-Brexit.
The Financial Services and Markets Bill aims to make “the most of the opportunities of Brexit by establishing a coherent, agile and internationally-respected approach to financial services regulation”.
The bill was confirmed in the Queen’s Speech today (10 May) delivered by Prince Charles.
It builds on the Financial Services Act 2021 which was the first step in amending the UK’s regulatory regime outside of the EU.
The government says the bill will deliver on the “ambitious vision” for the financial services sector set out by the chancellor at Mansion House last year.
The main elements of the bill are regulatory changes post-Brexit including Solvency II legislation, updating the objectives of the financial services regulators and ensuring people can access their own cash with ease.
Other elements include introducing additional protections for those investing or using financial products and to make it safer and support the victims of scams.
These measures form part of wider plans to ensure the sector continues to deliver for individuals and businesses, according to the government.
However, the government is being urged to use the bill to address longstanding concerns over the advice/guidance boundary.
Industry experts have warned that the new FCA Consumer Duty which comes into force later this year would be impacted if confusion around guidance and advice is not clarified.
The Consumer Duty requires firms to act to achieve good outcomes for customers.
AJ Bell head of retirement policy Tom Selby said: “By moving from rules-based to outcomes-based regulation, firms should be able to focus more on introducing interventions and prompts that help customers make better financial decisions.
“However, the effectiveness of this regulatory shift risks being undermined by the lack of clarity over the advice/guidance boundary.
“This lack of clarity means firms who do not wish to offer advice tend to steer well clear of anything that brings them close to the regulatory perimeter.”
Selby added: “The new Financial Services Bill provides a legislative platform to rethink that paradigm. Addressing this issue would fit neatly into the government’s flagship ‘levelling-up’ agenda, as it is those on lower incomes who cannot afford advice who most benefit from guidance.
“If guidance could be beefed up, non-advised savers would be in a better position to achieve their long-term goals.”
The bill will address the issue of economic crimes and create a far-reaching reform that would include change to Companies House and limited partnerships.
Dominic Offord, head of commercial disputes resolution at law firm Howard Kennedy, said: “We can expect to see more stringent identity checks on directors, people with significant control of companies and those filing at Companies House on behalf of a company as well as a ban on corporate entities being appointed as directors.
“A requirement for, and greater focus on, detailed accounting information being filed is also anticipated. It has been suggested, for example, that companies will be required to file the most detailed set of accounts that has been prepared for the company’s members. This twinned with the proposal for greater investigatory powers for Companies House may well exert additional pressure on those advising companies and directors.”