November 20, 2024

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by: kiran

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Tags: "Regulation"

Government’s Approach to Regulation: Key Updates and Implications for Firms

Rachel Reeves’ recent speech, as part of her broader regulatory approach, highlighted the government’s intention to recalibrate financial regulations to better promote economic growth and competitiveness while maintaining high standards.

For insurance firms and the wider financial sector, key points include a commitment to modernize the Financial Ombudsman Service (FOS) and consultations on replacing aspects of the Senior Managers and Certification Regime (SMCR) to reduce regulatory burdens and focus on growth.

Key highlights include:

  • A Treasury, FCA, and PRA consultation on removing the Certification Regime.
  • A PRA consultation on reducing the length of pay deferrals.
  • The completion of the FCA’s Handbook Review, removing duplication from the rulebook.
  • An FCA consultation on changes aimed at transforming financial advice and guidance.
  • Making better use of the FCA’s growth and competitiveness secondary objectives (the Treasury has issued new growth focused remit letters to the FCA, PRA, Monetary Policy Committee, Financial Policy Committee, and the Payment Systems Regulatory)

Key Initiatives

The Chancellor also emphasised the importance of building a closer partnership between the government and the financial services sector, aiming to ensure that regulation supports growth while maintaining high standards.  Some key initiatives included in the speech were:

  • Legislation to establish a new stock market (called PISCES) by May 2025, aimed at supporting companies to scale and grow.
  • A consultation on captive insurance to create a new approach focused on cementing the UK’s position as a leading financial services centre.
  • A call for evidence on the credit union ‘common bond’ and asking regulators to report on the mutuals landscape.
  • Establishing an industry-led Mutuals Council aimed at driving growth in the sector.
  • Publishing a National Payments Vision including action designed to progress Open Banking and support fintech businesses.

The EU

The speech also covered the Government’s approach to the European Union and whilst there is no plan to re-enter the single market or customs union, she emphasised that the UK aims to strengthen ties with the EU to maximise opportunities for the financial services sector. Her comments highlighted the government’s desire to ensure open dialogue and cooperation while addressing regulatory disparities post-Brexit. She pointed out that closer collaboration would benefit the UK’s financial market access and enhance cross-border stability and trade.

How we can help

The speech highlights that there will be plenty of regulatory change coming up at a time when firms are looking to embed the FCA’s Consumer Duty requirements.  In the longer term, such changes have the potential to reduce regulatory burden and ongoing costs of regulation and should allow financial services firms to grow and develop.  As this area develops, Padda will continue to review, monitor and assess how these regulatory changes may affect the insurance sector and the impact they will have on such firms and will be there to support our clients along the way.