Compliance
Sharpened regulatory teeth? The likely cost and benefits of proposed legislation James Hinch Head of Compliance NACFB
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or the first time since 1963, HM The Queen was unable to attend the opening of Parliament, so Prince Charles, monarch-in-waiting, gallantly stepped in. The Queen’s Speech saw the government seek to set a legislative programme for the coming year, with the prime minister promising measures to support the UK economy and tackle regional inequalities. The speech contained 38 bills for the next parliamentary session. Among the flagship measures is a financial services bill which is likely to be the most significant legislative development in the finance arena since the sector’s post-crisis financial reforms, with the financial regulators – the Bank of England, Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) – all set to take on vast swaths of new policymaking powers. Unlike the EU system that preceded it, the Financial Services and Markets Bill proposes changes to the regulatory process that leaves significant power in the hands of the regulators, with reduced parliamentary oversight. According to the Lobby Pack published on Gov.uk, the Bill will help to, “...seize the benefits of Brexit, by establishing a coherent, agile and internationally respected approach to financial services regulation that best suits the interests of the UK.” A lofty ambition indeed, and it will certainly assist the FCA in its ambition to move towards a more principles and outcomes-based 18 | NACFB
style of regulation which could likely mean that firms would be required to develop and enhance their processes in this regard. According to the government, the Bill will help to cut through existing red tape, harness the opportunities brought about by technology – including the safe adoption of cryptocurrencies – ensure continued access to cash as well as increase protection from scams and provide more support for those who fall victim to the scammers. You can be sure that we’ll be monitoring the effect of these proposed changes closely and although the initial impact areas will be the crypto and insurance markets, in time, the same model is likely to affect our membership as well. Another piece of proposed legislation that will affect our Members and their clients is the Economic Crime and Corporate Transparency Bill which aims to tackle fraud and money laundering by strengthening national security. It also seeks to improve the service provided by Companies House through the better collection of data to, “...inform business transactions and lending decisions across the economy”. This will include broadening their powers, introducing identity verification for company directors and shareholders, and enabling financial sector businesses to more effectively share information. In addition to curbing the actions of Putin and his cronies, I suspect this Bill is partly a response to the extraordinary level of fraud witnessed when companies were established overnight to take advantage of the government-backed loan schemes. And finally, we’ll also be keeping an eye on the Data Reform Bill which, the Government says, will create a data protection framework that reduces the burden for businesses. Only time will tell.
