The Treasury’s consultation on the UK's post-Brexit financial services regulatory framework closes on Wednesday. The consultation sets out numerous regulatory proposals, some of which are seen as highly controversial in the pensions industry.

 

The Future Regulatory Framework Review follows a previous consultation and “provides a once-in-a-generation opportunity to ensure that, having left the EU, the government maintains a coherent, agile, and internationally respected approach to financial services regulation that is right for the UK”, economic secretary to the Treasury John Glen said. 

 

 

The proposals include changes to regulators’ statutory objectives and new mechanisms for accountability, scrutiny and oversight of the regulators by parliament, the Treasury and stakeholders. It also aims to give more responsibility for designing and implementing regulatory requirements to UK regulators. 

 

But some in the industry have criticised the approach taken to regulate one of the UK’s most important sectors. 

 

Provider Aegon has called for the government to include pensions-related regulatory changes in the Regulatory Initiatives Grid which covers the Bank of England, the Financial Conduct Authority, the Prudential Regulatory Authority, the Treasury and the Pensions Regulator, to “paint a full picture of the regulatory burden facing the pensions industry”.  

 

It said doing so could also lead to greater alignment between DWP and FCA pension regulations, something the Work and Pensions Committee has recently called for.

  

“Government and regulators recognise there’s a huge amount of regulatory change facing the financial services industry and their recently introduced Regulatory Initiatives Grid is designed to show all of this together, allowing all parties to monitor the overall regulatory burden on firms,” said Steven Cameron, pensions director at Aegon. 

  

“However, surprisingly, the Department for Work and Pensions is not included in the Grid, which creates a glaring gap when it comes to assessing the regulatory burden faced by the pensions industry. This means there’s no visibility in the Grid of initiatives such as the review of automatic enrolment, simpler pension statements, the pension season or changes to the statutory right to transfer,” Cameron noted. 

 

 

Others have been even more vocal. Campaign group the Transparency Task Force and 36 other organisations last week produced a joint statement about their “serious concerns regarding the government’s major new proposals” for the financial services regulatory framework.  

 

They argue that the new framework creates conflicts of interest for regulators, as the government plans to introduce new secondary objectives for the PRA and the FCA which would oblige them to support the financial services industry’s growth and international competitiveness. 

 

The framework “should deliver far greater scrutiny and accountability. It should be obvious to all that financial regulators must never be tasked with becoming cheerleaders for the financial sector, because that would set them on a catastrophic collision course with their duty to protect consumers,” said TTF. 

 

“There’s just no sense in having highly hazardous conflicts of interest baked into the system – why risk the reputational damage, economic turmoil and catastrophic consumer detriment that such conflicts could so easily lead to?” it added. 

 

The group’s joint statement also believes that plans to strengthen the financial regime in relation to climate change “fall short”, and are calling for statutory objectives that oblige regulators to align the financial system with the Paris Agreement and to include provisions for nature. 

 

What is your take on the proposals for a new financial services regulatory framework?

Andy Agathangelou

Steven Cameron