The Financial Services Bill is intended to strengthen the UK’s regulatory framework in financial services, allow banks to fail in an orderly way, and to empower the Treasury to disclose senior pay levels in the banking sector.
ICAEW briefing for the Lords Second Reading debate of the Financial Services Bill
The ICAEW briefed the House of Lords ahead of their debate on the Bill on 23 February. We welcomed much of the thinking behind the Bill, but in the briefing we raised concerns about:
- Whether the aims of the Bill could be more clearly defined.
- How this legislation will fit with proposed European supervisory bodies.
- The practical difficulties of implementing recovery and resolution plans, or ‘living wills’.
- The proposed powers for the FSA to intervene in remuneration contracts.
- Possible unintended negative consequences for consumers of the new collective proceedings.
We recommended that:
- The House should consider whether the Bill sets out clearly enough the arrangements and responsibilities of each of the parties in the new Council for Financial Stability, in particular as these relate to the identification, monitoring and management of systemic risk within the Council.
- The Bill should include a clearer definition of ‘financial stability’, and the way in which the various powers fit together.
- The Bill should take into account the likely impact of new European financial regulatory bodies, or leave scope to factor the new European structures into the legislation.
- The House should consider limiting or amending proposed new powers for the FSA to intervene in employment contracts.
- Legislators should consider the possibility of negative unintended consequences of this legislation.
The ICAEW’s Financial Services Faculty is a centre of expertise on policy issues affecting the sector. The ICAEW’s manifesto, ‘Going for Growth’, contains recommendations on how confidence might be restored in financial services.
For further information, contact Sarah Buckley.