The Government has legislated for a committee to co-ordinate communication between the UK regulators and European Supervisory Authorities in the wake of concern the UK would not speak with one voice on financial regulation.
While the UK is splitting regulation along the lines of prudential and conduct regulation, European supervisory bodies are split according to sector with three different bodies each responsible for the regulation of securities and markets, banking, and insurance and pensions.
The joint committee on the draft financial services bill expressed concerns in its report before Christmas that, as the UK is moving to a new regulatory structure, Europe’s regulatory framework in moving in a different direction.
But in guidance on the financial services bill, published today, the Treasury says although previous arrangements enabled a committee to be set up if regulators felt in necessary, the bill will now require a committee to be set up.
The guidance says: “The bill has been amended to require that the international MOU establish this committee. The committee will report to the Chancellor, be chaired by the Treasury and include members of the FCA, PRA and Bank of England.”
The joint committee felt there was a “danger that the UK will not speak with one strong unified voice”. It said a memorandum of understanding on international co-ordination between the UK regulators should establish a “committee for ensuring the UK authorities agree consistent objectives and exercise their functions in a way that is effective”.
To counter this it recommended a high level committee made up of representatives from the Prudential Regulation Authority, the Financial Conduct Authority, the Bank of England and the Treasury to maximise the UK’s influence over European and international policymaking.