Matthew Connell examines the Financial Services Bill, sustainability and cladding cover
Queen’s Speech
The Queen’s Speech, delivered by Prince Charles, announced the Financial Services Bill, which will establish the basic regulatory structure for the UK after Brexit. It had been trailed by HM Treasury in its consultation on the future financial regulatory framework at the end of 2021.
The Bill transfers powers to the UK parliament and the statutory regulators that had previously been held by the European Union institutions – the European Commission, the European Council and the European Parliament. The government’s approach to the new regulation is to give the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) the bulk of the rulemaking powers for financial services regulation, but to reserve additional oversight of the regulators for both the Treasury and parliament – for example, through tougher requirements on cost-benefit analysis by regulators.
One area of debate in the run-up to the Bill was the extent to which the FCA’s objectives should be updated to fulfil specific outcomes. The London Market Group has called on the PRA and FCA to have detailed responsibility for the international competitiveness of UK financial services, to encourage global trade in financial services, while some consumer groups have argued that the FCA should have a more explicit role in tackling financial inclusion.
Sustainability and the London market
In April, the London & International Insurance Brokers Association (LIIBA) released an estimate that the London market could more than double if opportunities around sustainability are taken by UK insurers and regulators. LIIBA estimated that insurance-related spend could increase by $125bn (£100bn) by 2030, simply because of the effort needed to transition to net zero.
The research was presented to the All Party Parliamentary Group for Insurance and Financial Services (APPG IFS) on 25 April and gained important endorsement for the work the insurance profession is doing on sustainability. Craig Tracey MP, chair of the APPG IFS, said: “This new LIIBA analysis shows the huge potential opportunity that net zero is creating for the British economy. As a world leader in risk transfer and risk mitigation, there is a unique space for the UK to use this expertise and be at the forefront of enabling the global drive towards low-carbon and no-carbon technologies.”
Lord Gerry Grimstone, minister for investment, said: “As the largest global centre for speciality and commercial risk, the London market has continued to attract international investment for decades. So it is great that London’s role in building climate resilience in the race to net zero could significantly see an increase in our market’s opportunities, and in turn boost jobs and benefit the UK economy.”
Cladding
The UK government published a response in May to the Levelling Up, Housing and Communities Select Committee report on cladding remediation in relation to the Grenfell Tower tragedy. The government said it was “at an advanced stage” on a government-backed scheme to deliver professional indemnity insurance for professionals responsible for completing EWS1 forms, which assess fire cladding safety of tall residential buildings.
The government said it was “working with an insurance industry partner that will operate the scheme on the government’s behalf”.
Matthew Connell is director of policy and public affairs
