On 17 October 2019, the House of Commons Treasury Committee published the FCA’s response to its report published earlier this year on the regulatory perimeter.
The conclusions in the Committee report found that the:
- informal system for the FCA requesting changes to the regulatory perimeter from HM Treasury is insufficient;
- current system allows grey area between regulated and non-regulated activities to be exploited; and
- FCA needs formal power to recommend to HM Treasury changes to perimeter of regulation.
In the FCA’s response Andrew Bailey, Chief Executive of the FCA, said:
“[W]e share the Committee’s view that there could be a more structured and transparent approach for identifying and engaging with HMT on perimeter changes. This could allow for a regular opportunity to consider what activities are covered by regulation, and enhance transparency surrounding changes to the FCA regulatory perimeter.”
The FCA also states in its response that it is exploring what more it can do to ensure firms are clearer and more actively disclosing where their activities are unregulated, and considering how best to further raise consumer awareness of regulated and unregulated activities. As part of this work, the FCA is working with the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS) to identify options to raise consumer awareness about the scope of regulatory, FOS and FSCS cover. The FCA also refers the Committee to the Dear CEO letter it issued in January which set out its expectations to firms regarding clarity in their promotions about regulated and unregulated business.