Following today’s King’s Speech, changes to the Financial Ombudsman Service and Senior Managers and Certification Regime (SMCR) have been confirmed.
The background briefing documents from the speech, published today (May 13) said global competition has led to UK financial services experiencing slower growth globally.
It said: “We want Britain to be more competitive globally, and to harness the UK’s global leadership in financial services, so it is better able to support UK businesses and consumers.”
The new enhancing financial services bill will “modernise” how the sector is regulated, said the government.
This includes reforms to the Financial Ombudsman Service to increase “consistency and clarity” of decision making.
The Fos reforms include introducing a 10 year time limit for complaints to be brought to the ombudsman.
The government will also adapt the ‘fair and reasonable’ test used by the Fos to determine cases, to align it more closely to the FCA’s rules.
The enhancing financial services bill also included plans to reduce “ the overall burden” of the Senior Managers and Certification Regime (SMCR) by 50 per cent.
The regime was first introduced in 2016 in a bid to reduce harm to consumer and strengthen market integrity.
Once legislation is introduced, the regulators plan to consult on further proposed rule changes as part of phase two of the reforms.
The government said it will ensure the administrative burden on firms is “proportionate without compromising” on consumer protections.
It said: “[There will be] a focus on accountability of the most senior figures in financial services; freeing up firms to focus on serving customers and invest in growth, rather than dealing with overly burdensome compliance processes.”
The proposed reduced regulatory burden was welcomed by Arun Srivastava, partner at Paul Hastings, though he said some of the reforms “could be seen as not going far enough”.
He added: “Beyond the Fos reforms, the overall impact is limited — progress in one area is often offset by pressure elsewhere.
“Firms are still dealing with growing scrutiny over misconduct and potentially large compensation costs, including from the motor finance redress scheme.
“For many in the industry, the bigger issue remains the overall cost and complexity of UK regulation. Until those wider pressures are addressed, these reforms are unlikely to make a meaningful difference to competitiveness or growth.”
The bill will also consolidate the Payment Systems Regulator within the Financial Conduct Authority, so that firms will deal with fewer overlapping regulators.
Max Savoie, partner at law firm Ashurst, said this consolidation “is no surprise” and has been broadly welcomed.
He added: “The main question now is whether the government chooses to extend the powers currently held by the PSR or any of the statutory objectives that the FCA will inherit in relation to payment systems and their participants.
“Another key question is whether the consolidation will trigger changes to regulatory policy and supervisory approaches.”
tara.o’connor@ft.com
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