Overview

This bill aims to improve professional standards within the UK financial services sector by introducing a new licensing regime for individuals in controlled functions. This involves mandating specific training, competence requirements, and ongoing professional development to enhance integrity and reduce risk.

Description

The Financial Services (Banking Reform) Bill introduces a new licensing system for individuals working in controlled functions within the financial services sector. This licensing will be based on:

• Minimum competence thresholds: These include demonstrating integrity, holding relevant professional qualifications, engaging in continuous professional development, and adhering to a recognized code of conduct and revised Banking Standards Rules.
• Annual validation of competence: Individuals must undergo annual reviews to maintain their licenses.
• Senior Persons Regime: Specific provisions are included to regulate senior individuals who significantly influence controlled functions.
• Licence processes: The bill covers procedures for granting, refusing, withdrawing, and revalidating licenses.
• Application to all sectors: The licensing regime applies to all approved persons in controlled functions across all parts of the financial sector.

The House of Commons disagreed with the original Lords Amendment (No. 41) because subsequent Lords Amendments (Nos. 42-57) were deemed to provide a more appropriate approach to regulating professional standards.

Government Spending

The bill's financial implications are not explicitly stated in the provided text. The cost of implementing and maintaining the new licensing regime, including the administrative burden on regulators and training costs for individuals, will likely represent a significant, but unquantified, increase in government spending or indirect costs to the regulated industry.

Groups Affected

• Financial services professionals: All approved persons exercising controlled functions will be directly impacted, requiring them to meet the new licensing requirements and undergo ongoing professional development.
• Financial institutions: Employers will need to ensure their employees comply with the new regime, potentially incurring costs associated with training, compliance, and monitoring.
• Regulators: The Financial Conduct Authority (FCA) and other relevant regulators will have increased responsibilities for administering the licensing system.
• Consumers: Indirectly, the bill aims to benefit consumers by improving standards of professionalism and potentially reducing risks within the financial services sector.

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