The UK government has accepted HM Treasury’s (HMT) recommendations not to give the Financial Conduct Authority (FCA) wider regulatory scope and remit to deal with unregulated activity.
The government said that the current regime, where ministers decide on regulatory activities and scope to then seek approval by parliament, is sufficient.
“The government therefore takes full responsibility for consulting on and proposing any changes to the perimeter to parliament,” it said in response to the Treasury select committee’s recommendations.
“The government monitors the perimeter on an ongoing basis and acts when it sees consumer detriment. In order to ensure that this is done effectively, HMT already engages regularly with the financial regulators (including the FCA) at both official and ministerial level on whether the perimeter needs to be changed.”
Replicas
Currently, the Financial Policy Committee (FPC) has the power to recommend that the Treasury order the Prudential Regulation Authority (PRA) to require information from all regulated and unregulated entities.
On this basis, HMT said this process should be implemented for the FCA as well.
But the government was not fully convinced of the change.
“The recommendation proposes that this power is replicated – and even exceeded – for the FCA. This would be a significant change to the FCA’s remit, and important considerations need to be taken into account.
“Parliament has decided that the FCA should focus on regulating authorised firms – i.e. those firms which undertake at least one regulated activity.
“Asking the FCA to gather and process data from unauthorised firms would add significantly to the FCA’s supervisory responsibilities and have considerable resource implications, carrying the risk that the FCA’s ability to supervise authorised firms is reduced.
“The government will have further discussions with the FCA on the merits of this power, taking into account these considerations.”
International Adviser contacted the FCA, but a statement was not provided in time for publication.
