Overview

This bill amends the Financial Services and Markets Act 2000, primarily focusing on enhancing regulatory oversight of financial institutions, promoting competitiveness and growth, improving sustainability disclosures, and clarifying reporting requirements. It also addresses aspects of money laundering and terrorist financing.

Description

The Lords Amendments to the Financial Services and Markets Bill make several key changes. Amendments significantly alter the regulatory objectives of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), emphasizing the importance of competitiveness and growth alongside existing objectives. The bill introduces mandatory sustainability disclosure requirements, obligating financial institutions to report on environmental, social, and governance (ESG) factors. The Treasury gains power to set policy on sustainability disclosures and request reports from regulators. The amendments also streamline reporting processes to Parliament, improve transparency in panel appointments for various regulatory bodies, and introduce requirements for due diligence systems relating to forest risk commodities. Further, the bill modifies regulations regarding politically exposed persons (PEPs), aiming to balance risk mitigation with supporting domestic financial activity. Finally, it makes changes to complaint investigation procedures.

Government Spending

The bill does not directly specify new government spending figures. However, the increased regulatory oversight and reporting requirements may indirectly lead to increased administrative costs for both the government and the regulated financial institutions.

Groups Affected

• Financial Institutions (FCA & PRA regulated firms): Increased reporting requirements regarding sustainability, competitiveness, and other objectives, potentially impacting operational costs and strategic planning. New due diligence obligations for forest risk commodities.
• The Treasury: Increased responsibility for setting sustainability disclosure policies, receiving reports, and overseeing regulatory activities.
• Regulators (FCA, PRA, Bank of England): New responsibilities and reporting requirements related to sustainability disclosures, competitiveness, and growth objectives. Amended procedures for complaints and investigations.
• Parliamentary Committees: Expanded access to and influence over regulatory decision-making processes.
• Consumers: Potential impact depending on how increased regulatory attention to competitiveness and financial inclusion affects market dynamics and access to financial services.
• Businesses involved in forest risk commodities: New requirements for due diligence systems to comply with local laws.

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