The latest amendments to the Financial Services Act 2016 (the “Act”) have been published with many provisions such as sections 31, 37 and 39 to 42 having already received Royal Assent on 4 May 2016. Additionally, certain provisions of section 25 of the Act came into force on 10 May 2016 and section 32 came into force on 13 May 2016.
Please see below a brief break down and summary on some of the most important areas of the The Financial Services Act 2016:
- Sections 12 – 15 of the Act mean that the governance and accountability of the Bank is strengthened by ending the subsidiary status of the Prudential Regulation Authority and by bringing it within the Bank. Consequently, the Prudential Regulation Committee has been created as a committee of the Bank to replace the current PRA Board – these important new reforms place the Bank of England as an international example of best practice;
- Section 23 deals with the administration of the senior managers regime which aims to ensure that senior managers across the financial services industry can be held to account for failings that occur within their remit, through the extension of the Senior Managers and Certification regime to all authorised persons i.e. implementing a fairer system by introducing a ‘duty of responsibility’ for senior managers in all authorised firms, superseding the ‘reverse burden of proof’ that would have applied in the banking sector;
- Section 29 provides the Treasury with new powers (e.g. provision of grants or loans which can help fund the investigation and prosecution of illegal money lending offences) to support teams/companies who are working to tackle illegal money lending;
- On the same note, section 30 supports the government’s aims to have a robust and proportionate anti-money laundering and counter-terrorist financing regime, with resources focused on higher-risk areas and individuals in line with accepted practice; and
- Section 20 of the Act states that further steps should be taken to promote diversity and competition in the banking sector, by ensuring that regulators take into account different business models as part of their competition objectives.
This Act is the third piece of legislation following from the implementation of the Financial Services Act 2012 and the Bank Reform Act 2013. All three pieces of legislation have a particular focus and impact on the banking and financial sector with the aim of creating a banking system with enhanced competition, which is accountable, and that ultimately supports the economy, consumers and small businesses.
The full Act can be accessed following this link:
Should you require any further advice or information on the above, Cleveland & Co, your external in-house counsel, are here to help.