Financial Services Regulatory Initiatives Forum and the Regulatory Initiatives Grid to be introduced this summer.

By: Anna Lewis-Martinez and Rob Moulton

On 11 March 2020, HM Treasury published its response to the Call for Evidence on Regulatory Coordination.

In the summer of 2019, the government launched HM Treasury’s Financial Services Future Regulatory Framework Review to consider how the UK’s regulatory framework needs to adapt to be fit for the future, particularly in light of Brexit. The first phase of this review focused on the coordination between the UK regulators responsible for financial services regulation. On 19 July 2019, the government published a Call for Evidence on this issue which closed in October 2019.

The HM Treasury response document summarises the responses received to the Call for Evidence, and sets out how the financial services regulators, working with government, propose to improve regulatory coordination through the introduction of the Financial Services Regulatory Initiatives Forum and the Regulatory Initiatives Grid. The response document also explains the next phase of the Financial Services Future Regulatory Framework Review.

Summary of Responses

Responses to the Call for Evidence include requests for the:

  • Coordination of regulatory initiatives, in particular the volume and timing of regulatory initiatives, to ensure that regulatory activity is manageable for firms
  • Avoidance of policy overlaps between regulators and a request to coordinate policy work to ensure that there are no unintended interactions that need to be managed
  • Avoidance of issuing multiple consultations in a short period of time as responding to these can be resource intensive for firms
  • Production of cost/benefit analysis of new proposals for regulation to be of a consistently high standard
  • Collection of data to be targeted, proportionate, and only requested if such data genuinely facilitate regulation and supervision
  • Coordination of supervision for dual-regulated firms to avoid duplication and ensure consistency
  • Automation of supervisory engagement, including submission of firm data, to make regulation and supervisory reporting more efficient for both firms and regulators

Regulatory co-ordination

To improve the effectiveness of regulatory coordination, the regulators have proposed a new consolidated forward look of upcoming regulatory initiatives. The Regulatory Initiatives Grid will be launched in summer 2020 and will be published twice a year. The Grid will: provide an indicative two-year forward look of major upcoming regulatory initiatives affecting the financial services sector; include all publicly announced supervisory or policy initiatives with a significant operational impact on firms; and set out an indicative timetable for each regulatory initiative. This will provide a much clearer picture of expected regulated activity and will mean that firms can plan ahead.

The Grid will be managed by the Financial Services Regulatory Initiatives Forum, which will be made up of representatives from the Bank of England (BoE), the PRA, the FCA, the Payment Systems Regulator (PSR), and the Competition and Markets Authority (CMA), with HM Treasury as an observer member. The Forum members will review the functioning of the Grid and the Forum after one year and will consider any improvements that may need to be made.

Next Steps

The second phase of the Financial Services Future Regulatory Framework Review will focus on how to develop a more coherent approach to UK financial services regulation. The aim is to adapt the regulatory framework so that it provides for a clearer split of regulatory responsibilities. The Review will facilitate a look at how financial services policy and regulation are made in the UK, including how stakeholders are involved in the process. This second phase will form part of the government’s White Paper on Financial Services, which is due to be published in spring 2020.