Treasury Sub-Committee shares update on scrutiny of regulators’ proposals

1 February 2024

The Treasury Committee’s Sub-Committee on Financial Services Regulations today publishes an outline of its work between July 2023 and January 2024.

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

Authorised push payment fraud

For a sustained period, the Sub-Committee has scrutinised the plans of the Payment Systems Regulator to get clarity on the reimbursement of victims of Authorised Push Payment fraud.

Following requests from the Committee for a clear plan, the regulator published a policy statement confirming that the maximum payout per claim would be £415,000, with an excess of £100. It also set 7 October 2024 as the final date by which firms must comply with the new rules.

The Committee will continue to monitor and scrutinise the efficacy of the scheme to ensure the regulator delivers on its promises to consumers.

Enhanced visibility of insurance terms for leaseholders

The Sub-Committee examined the Financial Conduct Authority’s consultation relating to multi-occupancy building insurance following the 2017 Grenfell Tower fire. The Sub-Committee looked closely at the proposal to give leaseholders more information about their building’s insurance through changes which would see them considered ‘customers’ in the same way as the freeholder.

The Chair of the Sub-Committee wrote to the Levelling Up Secretary, Michael Gove, pressing him for details on when legislation to ban commissions on building insurance policies being paid to landlords or agents would be implemented. In his response, Mr Gove confirmed his intention to implement the ban. This has been proposed within the Leasehold and Freehold Reform Bill.

Solvency II

Following the PRA's review of Solvency II rules, Members probed the regulator on when the reforms will be implemented and what the benefits or risks of the proposed changes were.

Future work

In the first half of 2024, the Sub-Committee plans to examine the FCA’s proposal that personal investment firms (PIFs) hold more capital. This follows recent figures showing the Financial Services Compensation Scheme paid out £757m of the £973m that consumers received in redress between 2016 and 2022.

MPs on the Sub-Committee will closely monitor the progress of proposals to retain the public’s access to cash in an increasingly digitised financial landscape. They will also continue to scrutinise the work of the Prudential Regulation Authority, with a particular focus on their proposals regarding Solvency II and the operational resilience of the UK financial sector in relation to the use of third-party providers.

The Sub-Committee is likely to write to the FCA regarding its consultations on UK-based Money Market Funds and the Overseas Funds Regime.

Chair's comment

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

“Regulation of the financial services industry must strike a very delicate balance between ensuring robust protections for consumers while not being overbearing and stifling competition. The Sub-Committee is very cognisant of that, which is why it’s so important that we scrutinise the regulators’ consultations.

We’ve seen the positive impact of the Sub-Committee in the last six months, including in relation to APP fraud reimbursement and insurance. It’s important we continue this work with full vigour in 2024.”

Further information

Image: AdobeStock