Treasury Financial Services Regulations Sub-Committee publishes quarterly progress report

• Treasury Sub-Committee on Financial Services Regulations
• Treasury Committee

The Sub-Committee takes the lead on examining regulatory proposals for financial services. The report outlines which proposals have been examined in this quarter and details its working methods.

Authorised push payment fraud

The Sub-Committee has seen successes following its work on proposals from the Payment Systems Regulator to mandate banks and building societies to reimburse scam victims. Following criticism from the Committee that the industry body tasked with implementing the scheme had “inherent conflicts of interest”, the regulator revised its proposals in line with the Committee’s recommendations.

The regulator also removed the £100 minimum threshold at which consumers would be eligible for a refund, following questions from the Committee.

The Bank of England, which operates the CHAPS payment system, used for things such as house purchases, has also committed to follow this approach.

The Committee will continue to monitor and scrutinise the efficacy of fraud reimbursement and the speed of its implementation.

Support for insurance customers in financial difficulty

The Sub-Committee questioned the Financial Conduct Authority (FCA) on the cost-benefit analysis conducted on new guidance to insurance firms for supporting customers in financial difficulty. The FCA informed the Committee the cost of implementing the policy would be £327,000 across 4,000 firms. The Committee will write with further questions on these calculations.

Strong and simple framework

In correspondence the Prudential Regulation Authority (PRA) reaffirmed that the collapse of Silicon Valley Bank UK would not change its approach to the new Strong and Simple capital framework reforms.

Financial Services Compensation Scheme (FSCS)

The Sub-Committee also scrutinised the management expenses levy limit for the Financial Services Compensation Scheme (FSCS).

Future work

In the coming months, the Sub-Committee will be taking oral evidence on an FCA consultation on multi-occupancy building insurance, which has increased significantly in cost since the Grenfell Tower fire in 2017.

The reforms would require insurers and brokers to show they have considered the interests of leaseholders when designing and pricing insurance products.

Looking ahead to the Financial Services and Markets Act, the Committee agreed to write to the FCA on the new requirement to establish cost-benefit analysis panels.

Commenting on the report, Harriett Baldwin MP, Chair of the Treasury Sub-Committee on Financial Services Regulations, said:

“Scrutiny of new financial services proposals is a key part of the Treasury Committee’s remit. We have been conducting this work for almost a year and already have achieved key successes, including a stronger framework for the implementation of mandatory fraud reimbursement.”

Further information

• The Sub-Committee takes the lead on examining regulatory proposals for financial services. It scrutinises proposals which are open for consultation from the Financial Conduct Authority (FCA), the Bank of England, the Prudential Regulation Authority (PRA), and the Payment Systems Regulator (PSR). Further information can be found here.
• Further information on the Sub-Committee’s recent work can be found here.
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