Background
On 10 May 2022, her Majesty the Queen set out the UK Government’s legislative priorities for the upcoming parliamentary session in the Queen’s Speech. Following the Queen’s Speech, the Government published background briefing notes unveiling details of the key reforms it plans to make over the course of the next parliamentary session. Among the 38 bills presented which all aim to drive economic growth, improve living standards and fund sustainable investment in public services the Financial Services and the Markets Bill, and Economic Crime and Corporate Transparency Bill focus on strengthening the financial services industry, are enormously important for financial practitioners who will be obliged to apply the relevant regulation. The proposed reform has received wide support, with David Postings, Chief Executive of UK Finance, strongly welcoming the announcements, commenting in particular that the two aforementioned bills are seen ‘as two key pieces of legislation for financial services’ going forwards.
Financial Services and market bill
The Financial Services and Markets Bill (‘FS Bill’) is brought forward with the aim of strengthening the UK’s financial services industry whilst ensuring that it continues to act in the interests of all people and communities.
Purpose of the FS Bill
The purpose of the FS Bill is to not only maintain, but also to enhance the UK’s position as a global leader in financial services, to promote a competitive marketplace and further support economic growth.
Aim and benefits of the FS Bill
The FS Bill aims to make the UK an even more attractive place to invest and do business while ensuring the maintenance of the UK’s high standards in financial services regulation. It further aims to revoke all retained EU law on financial services, seize the benefits of Brexit and implement financial services regulation that best suits the interests of the UK through establishing a coherent, agile, and internationally respected approach to the financial services sector. The safe adoption of cryptocurrencies and resilient outsourcing to technology providers will be primarily implemented with the aim of harnessing the opportunities offered by innovate technologies. The FS Bill further supports individuals’ confidence in the financial services sector by introducing additional protections for those investing or using financial products. It will ensure and enable individuals continued access to their own cash with ease and protect them from scams through supplementary safety mechanisms and support.
Additionally, the rules regulating the UK’s capital markets will be reformed to enhance and promote investment. John Glen, Economic Secretary to the Treasury, commented that Government is reforming the UK financial services sector now that UK has left the EU ‘to ensure it acts in the interests of communities and citizens, creating jobs, supporting businesses, and powering growth across all of the UK’.
economic crime and corporate transparency bill
The Economic Crime and Corporate Transparency Bill (‘EC Bill’) will be brought forward to strengthen powers to tackle illicit finance by cracking down on kleptocrats and terrorists, further reducing economic crime and helping businesses grow.
Purpose of the EC Bill
The purpose of the EC Bill is to stop economic crime, crack down on criminals who abuse the open economy and strengthen the reputation of the UK as a place where legitimate businesses can thrive.
Aim and benefits of the EC Bill
The EC Bill aims to tackle the most prevalent type of crimes in the UK, including money laundering, fraud, and scams, by focusing on the delivery of greater protections for consumers and businesses, boosting the UK’s defences. The EC Bill focuses on protecting national security by making it even harder for criminals to engage in money laundering, corruption, terrorism-financing, illegal arms movements and ransomware payments. One of the main goals is to ensure that Putin and others like him, do not benefit from the UK’s open economy.
Importantly, the EC Bill aims to improve data collection and the accuracy of Companies House data and strengthen transparency requirements. These will be achieved by broadening the powers of the Registrar of Companies, introducing identity verification for people who manage, own and control UK companies and entities. Additionally, it will enable Companies House to deliver a better service and provide it with more effective investigation and enforcement powers, tackling the abuse of limited partnerships and enabling businesses in the financial sector to share information more effectively to detect and prevent economic-related crimes.
Next steps
The reforms on the financial services sector by the Government after Brexit are necessary to power growth across the UK, to attract business, investment, and encourage innovation by making the UK the best regulated economy. Accordingly, the FS Bill and EC Bill formally address a number of concerns and aim to strengthen the financial services industry across the board. It is important that financial practitioners understand and consider the updated objectives of the financial services regulators to ensure a greater focus on growth and international competitiveness.
To review the background briefing notes please click here.
For more information, and any guidance or advice on the implications on financial services arising from the Financial Services and Markets Bill and Economic Crime and Corporate Transparency Bill Cleveland & Co External in-house counsel™, your specialist outsourced legal team, are here to help.
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