It was the hat that really brought home the reality of Brexit. If you read the fashion pages of the Financial Times, and I’m sure as snappy dressers you all do, you may have seen an article recently about how to choose the perfect sunhat for your summer travels. The suggestions in the article were all daft but someone in the comments below linked to a site selling exactly what I’d been looking for, from a South African company. There was free shipping to Germany, so I thought I’d just have to pay a bit extra to get it delivered to the UK. Nope, they ship to most European countries, but not here. That’s the price of Brexit right there, cutting off the supply of stylish sunhats.
Luckily, the government is much more positive about the benefits of Brexit, and in particular is steaming ahead with its plans to reshape the regulatory environment. The Financial Services and Markets Act 2023, which is finally now a thing, repeals retained EU law (acronym klaxon, we’re now referring to it as ‘REUL’) relating to financial services and replaces it with a new Smarter Regulatory Framework (you guessed it, SRF). Alongside the Mansion House Speech announcements last week we got more details of how the government will deliver this in practice, in the form of a plan from the Treasury.
According to the plan, ‘the UK regulatory framework for financial services is complex and difficult to navigate’, which no one would disagree with. Just how complex is illustrated by the definitive piece of research on how much EU legislation came from the EU, by the House of Commons Library, which concluded it was ‘impossible to achieve an accurate measure’.
Each piece of EU law that related to financial services has been copied across to the UK rulebook, and now has to be unpicked piece by piece and replaced by something that works better, and the plan published last week gives us more of a timetable as to how that will work. In fact, there’s literally a timetable on page ten which lays out the plan for introducing the changes to the chunkiest parts of the rules. The ongoing review of Solvency II, for example, is due to reach the statute book by the end of this year. Changes to the PRIIPs rules will have to wait until next year, whereas the government is only ‘considering its approach’ to the green taxonomy legislation, and the timescales for any changes are ‘to be determined’.
Nine times out of ten, when you speak to a busy financial services person about this sort of stuff, the response will be ‘yeah, fine, tell me when I need to do something about it’. But there’s a chapter in this plan called ‘Stakeholder input into technical approach and government policy-making’. There will be much consultation, including six-week consultations on draft statutory instruments to replace the REUL. There are specific plans to conduct Calls for Evidence and public consultations. The objective is to avoid unintended consequences – and the message is very much ‘well, if you don’t like it, you should have said something’.
If you want to hear more on all this stuff, including the pensions topics he covered last week, there’s a podcat here from Tom McPhail. Alternatively, if you want a chance to ask him directly what he did on his holidays, or ask Mike Barrett how long it takes to cycle round the Isle of Wight, join us in a lang cat webinar on July 31st where we’ll be continuing to chunter on about the Mansion House announcements.
One final thing to look out for this week is the FCA Annual Report, due to be published today, dependent on when it’s tabled in Parliament. I’ll be waiting patiently for it, wearing my unfashionable sunhat.
- If you’re interested in annuities – and who wouldn’t be? – then you’ll want to read Reinventing Annuities: ‘Mix and Match’ innovative retirement income, a white paper by GBST (full disclosure: GBST is a lang cat client) calling for more innovation around retirement income solutions.
- A further clear steer from the FCA on how it will be applying the consumer duty rules is hiding in plain sight as a letter to the Treasury Committee. Much of the snappily-titled ‘Correspondence from the Financial Conduct Authority, relating to savings rates’ will also apply across the broader industry, including the need to identify the target market and the metrics that might be used to measure fair value.
- The National Audit Office has announced it’s planning an investigation later this year into how effectively the FCA is adapting to change, including its new responsibilities and its oversight of the consumer duty. If you’re a follower of Regulatory Twitter you might think that the industry believes the FCA’s bum is, as it were, oot the windae. It will be the NAO’s job to work out if it really is.
- This week Nick Smith MP asked the not unreasonable question of when the Pensions Dashboard programme might be ready. The reply from the Minister was ‘the Dashboards Available Point will be when the Secretary of State for Work and Pensions is satisfied that the dashboards ecosystem … is ready to support widespread use by the general public’. That’s the parliamentary equivalent of your mum telling you your tea will be ready when it’s ready, so clear off and get out from under her feet.
- If you haven’t watched the Wham! documentary on Netflix yet, I highly recommend you do, and for sheer joy, here’s this week’s music recommendation.
Thanks for reading,