Over the last fortnight, the House of Commons Treasury Committee has published a series of important reports on the future of financial services regulation. They echo civil society calls and urge the government to remember the lessons of the financial crisis.
In particular, the committee:
- Recommends that the Treasury should require the Financial Conduct Authority to ‘have regard to’ financial inclusion for the first time.
- Warns against government proposals to give regulators objectives to promote the “growth and competitiveness” of the finance sector, in favour of new objectives to promote the long-term economic growth of the UK as a whole.
- Has established a sub-committee to scrutinise financial services regulations, supported by a new scrutiny unit.
The Lab’s Head of Policy and Advocacy, Marloes Nicholls, said:
“It’s encouraging to see the Treasury Select Committee echo the calls of civil society to ensure that the painful lessons of the financial crash are taken into account as UK financial regulation undergoes a once-in-a-generation redesign.
Now is the time for government to listen – ahead of the forthcoming Financial Services and Markets Bill, it must rethink the dangerous proposal to give regulators objectives to promote the “competitiveness” of the finance sector.
Regulators should act in the public interest, and be given a mandate to prioritise stability, inclusion, and climate goals, not become cheerleaders of the financial services industry.
We welcome the establishment of a new parliamentary committee to provide greater scrutiny over regulatory decision-making – but in order to be effective, it’s important that the committee is properly resourced with a clear mandate to act in the public interest.”
The committee’s reports come ahead of the landmark post-Brexit Financial Services and Markets Bill, expected to be introduced in July. Crucially, the Bill will translate the government’s major proposals for the Future Regulatory Framework into law.
As part of a coalition of 37 civil society organisations, the Lab has been campaigning to ensure that the future framework for regulation is both democratically accountableand reflects that the role of finance is to serve the UK’s economic, environmental, and social goals. We are pleased to see our work referenced in the Treasury Committee’s report, alongside the work of a growing group of allies, including 59 leading economists who wrote a letter to the government in May on the dangers of a competitiveness objective for financial regulators.
- The House of Commons Treasury Committee’s reports on the ‘Future of financial services regulation’ are available here: https://committees.parliament.uk/committee/158/treasury-committee/publications/
- Civil society joint statement on the future regulatory framework for financial services, 9th February: https://financeinnovationlab.org/insights/financial-services-future-regulatory-framework-joint-statement/
- Economist letter on the dangers of a competitiveness objective for financial regulators, 16th May: https://financeinnovationlab.org/insights/economist-letter/
- ‘Financial Services and Markets Bill: What we know so far’, Finance Innovation Lab blog, 23rd May: https://financeinnovationlab.org/financial-services-and-markets-bill-what-we-know-so-far/
- ‘Poll shows widespread concern over Chancellor’s financial reforms’, Finance Innovation Lab press release, 9th May 2022: https://financeinnovationlab.org/queens-speech-2022-poll-shows-widespread-concern-over-chancellors-financial-reforms/
- The Finance Innovation Lab is a UK-based charity working to build a financial system that serves people and planet – one that’s democratic, sustainable, just and resilient. We support the growth of purpose-driven financial institutions, including through Lab Fellowship, the world’s first incubator to support financial innovators putting social or environmental purpose at the heart of their work. We work with major UK banks, through strategic partnerships with them and their staff to support greater action on climate change. We also coordinate the Transforming Finance Network of civil society organisations focussed on financial sector policy.
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