The Financial Services and Markets Bill 2022-23 (FSM Bill) completes the committee stage

On 23 March 2023, the FSM Bill completed its committee stage in the House of Lords. If passed, it will make extensive reforms to the regulation of financial services in the UK.

The FSM Bill proposes extensive reform to the regulation of financial services in the UK. It aims to implement the outcomes of the government’s Future Regulatory Framework (FRF) Review and to make other changes to update the UK regulatory regime. There are, for example, provisions for the revocation of retained EU law relating to financial services and for the introduction of regulation of stablecoins. 

HM Treasury has stated that the FSM Bill will:

• Implement the outcomes of the FRF.
• Maintain the UK’s position as an open and global financial hub.
• Harness the opportunities of innovative technologies in financial services.
• Increase the competitiveness of UK markets and promote the effective use of capital.
• Support the levelling up agenda, financial inclusion and consumer protection.

A line-by-line examination of the FSM Bill took place during the final day of the committee stage. The most recent issues that have been considered include (but are not limited to):

• Regulation of climate and nature offsets.
• Limiting powers of the Prudential Regulation Authority.
• Banking reform.
• Safeguards in place for policy holders following failure of an insurance company.
• Introducing an ability for the FCA to require the Financial Ombudsman Service to refrain from exercising its powers in certain circumstances.
• Duties of pension providers and investment managers.
• Duty of the Financial Conduct Authority to report on financial inclusion and powers of regulators.

A full list of the issues discussed is set out in a press release published on Parliament's website, along with a revised version of the FSM Bill. The FSM Bill will now move on to the report stage for further scrutiny.

Financial services firms and their insurers should continue to monitor these consultations to see what changes make it into the final bill.