In the media

FS & Markets Bill: Major changes on the horizon for financial services organisations

By Marc Maxfield

Global Banking and Finance Review

02 September 2022

This article was first published in Global Banking & Finance Review

The chancellor has set out his plans for the future of the UK’s Financial Services (FS) sector, in the largest piece of FS legislation in over two decades. But what are the key takeaways and, as we look to further iterations, where should firms be focusing?

The FS & Markets Bill has lofty ambitions to position the UK as a global leader in FS, outlining the key reforms that the government believes it will take to get there. In a bold move, growth and competitiveness are set to become official objectives of the regulators – a clear message that they must now shape, lead and deliver this for the sector.

The response from the financial services sector has been positive, particularly as a result of the focus on delivering growth, international competitiveness and meaningful change in terms of regulators’ objectives and the regulatory framework.

Future Regulatory Framework and objectives

A key driving force behind it, the Bill contains broad powers for the regulators to modify or restate retained EU legislation and directives with UK-specific regulations. This is both a huge opportunity and a huge challenge – particularly with regards to ensuring that the regulators have enough time and adequate resources to do this.

Encouragingly the UK is already showing leadership in policy areas not driven by previous EU regulation, such as climate change. This may be useful in setting out a path for how the government and regulators can approach a redesign of this scale. Vitally, the future framework must support the sector in achieving its long-term objectives.

Insurance is likely to be an area where the sector sees changes first, with the recently completed government consultation on reforming prudential regulation of the insurance sector. This is seen as an early test of what competitiveness will mean in the new regulatory framework. The government is keen to increase the potential for more private capital investment to be released into long-term infrastructure and green projects. The Prudential Regulation Authority (PRA) has recognised a ‘once-in a generation’ opportunity to reshape UK insurance regulation, but also the need to balance wider investment with investor protection.

To make this work effectively, there will need to be an effective government response to its consultation setting out how they structure infrastructure projects to allow investment that balances from a capital standards perspective.

There are other areas of the FS regulatory framework where firms are likely to want to see changes quickly. These include the ‘advice vs guidance boundary’ and redesigning the current regulatory regime to allow them to provide more personalised guidance to their customers without providing advice.

Another area is customer disclosure, where removing prescriptive EU requirements on the form and content of disclosure may encourage firms to provide more tailored communications to aid customer understanding.

Consumer protection and access to financial services

With the cost-of-living crisis tightening its grip, protecting consumers has never been more important. It is a positive development that the Bill includes provision for the protection of access to cash for people that continue to need it. The FCA Financial Lives survey found that 10% of UK adults rely on cash for almost all their daily purchases and many of these people are vulnerable. It has also stated that its work on access to cash reflects a wider intention to support financial inclusion more widely.

As a result, firms may see the FCA take a more interventionist approach to consumer protection and financial inclusion, potentially using regulatory tools like the new Consumer Duty as the basis for action. Firms must be mindful of this and ensure that, as they prepare their implementation plans for the Consumer Duty, that they include preventing harm from poor access to products and services as part of delivering good outcomes for customers.


The UK wants to lead globally on cryptoassets, with the Bill setting out plans to introduce regulation of cryptocurrency and in particular stablecoins as a means of payment. This is a significant development and the key challenge for the government and regulators will be balancing appropriate initial regulatory oversight with investment attractiveness, while being able to evolve as innovation in cryptocurrencies and developments in Central Bank Digital Currencies continue.

For financial services firms, this means the developing regulatory framework will look to address a range of risks identified from cryptoassets, including financial crime, consumers purchasing unsuitable products or suffering losses, and financial stability. However, regulators and HM Treasury recognise the potential benefits, as illustrated by the FCA offering potential support to crypto asset propositions through its Innovation Hub.

Prepping in anticipation

FS firms need to understand that they are facing a period of significant regulatory change, consultation and uncertainty. This will require them to remain abreast of developments, adopt a flexible approach and understand when action is necessary.

It’s important for firms to be aware of the FCA’s focus on financial inclusion and access under the forthcoming Consumer Duty – they will need to demonstrate unequivocally that they have clear roadmaps and plans to achieve a fundamental shift in culture – moving from a mindset of preventing poor conduct, to proactively prioritising good outcomes for customers.

The Bill promises to deliver across several key areas, but competitiveness does not happen overnight, the sector needs to provide input and help influence a regulatory environment that is fit for the future. The regulator and government are reliant upon hearing from firms, now is the time to speak up.

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