On 10 October 2019, the House of Commons’ Treasury Committee (Committee) published its report following the Government’s response to the Committee’s earlier report on the work of the FCA and the perimeter of regulation (see previous blog here).
In response to the Committee’s recommendations, the Government states that it is working with the FCA to consider whether further steps may be taken to ensure consumers understand the relevant regulatory protections when they engage with unregulated products, as part of its response to the failure of London Capital & Finance plc failure, including the role of the Financial Promotions Regime. The Government will announce the outcome of this work as soon as possible.
The Government has rejected the recommendation that the FCA be given the formal power to request changes to the regulatory perimeter as it considers it a ministerial decision, with approval by Parliament. The Government explains that it monitors the perimeter on an ongoing basis and acts when it sees consumer detriment. In addition, it points out that HM Treasury engages in frequent dialogue with the financial regulators at both an official and ministerial level on whether the perimeter needs to be changed.
The Government will have further discussions with the FCA in relation to the merits of the recommendation that it should have greater information gathering powers with regards to unregulated activity. The Government argues that this would be a significant change to the FCA’s remit and would significantly add to the FCA’s supervisory responsibilities. It adds that this would have considerable resource implications and may in fact hinder the FCA’s ability to supervise authorised firms.