Overview

This bill aims to improve professional standards within the UK financial services sector by introducing a mandatory licensing regime for individuals holding controlled functions. This regime will focus on competence, integrity, and adherence to a revised code of conduct, impacting how individuals are regulated and work within the industry.

Description

The Financial Services (Banking Reform) Bill introduces a new licensing regime for individuals in the financial services sector who hold "controlled functions." This regime mandates:

• Minimum Competence Thresholds: Individuals must meet specified minimum standards for competence, including integrity, professional qualifications, continuous professional development, and adherence to a recognized code of conduct and revised Banking Standards Rules.
• Licensing Process: The bill outlines provisions for granting, refusing, withdrawing, and revalidating licenses. Regular revalidation will be required.
• Senior Persons Regime: Specific provisions address a "Senior Persons Regime" for those significantly influencing controlled functions.
• Annual Validation: Individuals will need annual validation of their competence to maintain their license.
• Applicability: The licensing regime applies to all approved persons exercising controlled functions, regardless of the specific financial sector.

The Commons disagreed with the Lords' Amendment 41 because subsequent amendments (42-57) provided a more suitable approach to regulating standards within the financial services sector, rendering Amendment 41 incompatible.

Government Spending

The bill doesn't specify the direct cost to the government. However, the implementation of a new licensing regime, including associated administrative and enforcement costs, will likely involve additional government expenditure. The exact figures are not provided in the available text.

Groups Affected

The bill significantly impacts:

• Individuals in financial services: Those holding controlled functions will need to obtain and maintain licenses, potentially requiring additional training and ongoing compliance.
• Financial services firms: Employers will need to ensure their employees meet licensing requirements, potentially incurring costs related to training and administration.
• Regulators: Increased workload and responsibilities associated with implementing and enforcing the new licensing regime.

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