Major reforms for UK financial services come into force
The financial services sector faces a major overhaul as the Bank of England and Financial Services Act passes though Parliament, the government has announced.
As the third recent piece of legislation intended to reform the financial sector, the act aims to implement changes to confirm the Bank of England’s status at the centre of the UK’s economic and financial systems.
Most significantly, the Senior Managers’ and Certification Regime, which requires a clear allocation of responsibilities and personal assessment at a senior level, is being extended to encompass all financial services firms. The extension to the regime also emphasises replacing the 'reverse burden of proof' system with a ‘duty of responsibility’ for senior managers in all authorised firms.
The Prudential Regulation Authority will be letting go of its subsidiary status and fully integrating with the Bank of England. This move, coupled with the National Audit Office undertaking value for money reviews, is intended to strengthen the governance and accountability of the Bank.
Measures to protect taxpayers are also being put in place, including new powers for the Treasury to help tackle illegal money lending and includes reforms to help promote competition in the banking sector.
Governor of the Bank of England, Mark Carney, said: "By placing the Bank’s three major policy committees on the same statutory footing, by streamlining the Monetary Policy Committee’s (MPC) meeting schedule, and by further enhancing the transparency and governance of the Bank’s operations, this legislation will ensure the institution can operate more effectively as One Bank to promote the good of the people of the United Kingdom by maintaining monetary and financial stability."
In previous years, the Financial Services Act 2012 dismantled the failed tripartite system and established the Bank of England in its central role of overseeing monetary policy and financial stability for the whole of the UK.
The Banking Reform Act 2013 further put into force changes that focused on individual accountability and raised standards in banking at the recommendation of the Independent Commission on Banking and the Parliamentary Commission on Banking Standards.