Overview

This bill amends the Financial Services and Markets Act 2000 and other related legislation. Key changes include introducing a duty of care for financial service providers towards consumers, protecting mortgage prisoners from excessive interest rates, and clarifying regulations around payment services and the provision of cash. The bill also makes adjustments to data retention rules and incorporates considerations of the 2050 carbon target into financial regulations.

Description

The bill makes several significant changes to UK financial regulations:

Duty of Care for Financial Service Providers:

A new duty of care is introduced, requiring firms to not profit from exploiting consumer vulnerability, behavioral biases, or constrained choices. The Financial Conduct Authority (FCA) must create rules implementing this duty by April 6, 2022.

Mortgage Prisoner Protection:

The FCA is mandated to create rules capping Standard Variable Rates (SVRs) for mortgage prisoners (those unable to switch lenders) at no more than 2 percentage points above the Bank of England base rate. It must also ensure access to fixed-rate deals for eligible mortgage prisoners.

Payment Services and Cash Provision:

The bill clarifies the definition of payment services, specifically addressing the provision of cash outside of ATMs. It aims to distinguish between legitimate cash transactions and those that might be used for illicit activities.

Data Retention and Climate Change:

Amendments are made to data retention rules under the Market Abuse Regulation, removing a five-year data retention limit. Additionally, the bill integrates the 2050 carbon reduction target into relevant financial regulations, although some aspects of this integration are delayed until after January 1, 2022.

Other Amendments:

The bill also includes technical amendments to various sections of existing legislation, clarifying the geographical scope of certain regulations (England, Wales, Northern Ireland, and Scotland) and specifying which financial institutions are considered “relevant” under specific regulations.

Government Spending

The bill doesn't directly specify government spending figures. The implementation of the new regulations may involve some administrative costs for the FCA and government agencies responsible for oversight but precise figures are not provided in the bill text.

Groups Affected

• Financial service providers: Facing new duties of care and potential costs associated with compliance.
• Consumers: Potentially benefiting from increased protection against exploitative practices and more favorable mortgage terms for mortgage prisoners.
• Mortgage prisoners: Directly benefiting from potential lower interest rates and access to fixed-rate deals.
• Businesses providing payment services and cash handling services: Affected by clarifications to regulations regarding cash transactions.
• FCA: Responsible for implementing the new regulations, including establishing the duty of care, setting interest rate caps for mortgage prisoners, and adjusting data protection requirements.

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