The Queen’s Speech 2022

The UK Government sets out its legislative programme each year in the “Queen's Speech”. The content of the 2022 speech reflects the greater responsibility the Government now has for financial services legalisation since the UK left the EU and contains proposals for reforms across the sector. Alongside the Financial Services and Markets Bill, there are other Bills planned that will have an impact on financial services firms. These Bills are likely to be introduced over the coming months and it will be important for firms to analyse the impact of proposals on their business models.

The Government will introduce the Financial Services and Markets Bill with the aim of enhancing ”the UK's position as a global leader in financial services, through the establishment of a coherent, agile and internationally-respected approach to financial services regulation”. There are five main elements to the Bill.

1. Revoking retained EU law on financial services and replacing it with an approach to regulation that is designed for the UK. The Government has already started consulting on reforming onshored EU regulation so that is more suited to the UK. More information on proposed changes to Solvency II and to the MiFIR/MiFID II regimes.
2. Updating the objectives of the financial services regulators to ensure a greater focus on growth and international competitivenes. With the UK leaving the EU, the Government has been reviewing and consulting upon the way that financial services regulation is formed in the UK and the split of responsibilities between Parliament, the Government and regulators in the Future Regulatory Framework Review. The Bill is likely to introduce new statutory secondary objectives for the PRA and FCA to require them to act in a way that facilitates the long-term growth and international competitiveness of the UK economy. Although broadly welcomed, there are questions on how the regulators will balance these new objectives with their primary objectives of financial stability, consumer protection and market integrity. The Government is also proposing to amend the regulatory principles to ensure that sustainable growth should occur in a way that is consistent with its commitment to achieve a net zero economy by 2050.
3. Reforming the rules that regulate the UK's capital markets to promote investment, including implementing the Wholesale Markets Review. The UK's capital markets are subject to large and complex onshored EU regulation such as MiFID II. In its response to the Wholesale Markets Review, HM Treasury will make changes to legislation that will allow market participants to have greater choice on where they trade by removing the double volume cap and the share trading obligation. HM Treasury will also amend legislation with the aim of simplifying and improving the transparency regime contained within the regulations. Read more.
   
   The Bill may also include changes to the Prospectus Regime. These changes would be aimed at facilitating wider participation in the ownership of public companies by simplifying the regulation of prospectuses and improving the quality of information investors receive to allow them to make more informed decisions.
4. Ensuring that people across the UK continue to be able to access cash. Although cash is now only the second most frequently used method of payment in the UK, 5.4 million adults still rely on it to a great extent in their daily lives. The Bill will contain legislation to give the FCA new powers over the UK's largest banks and building societies to ensure that cash withdrawal and deposit facilities are available within a specified reasonable distance for all communities.
5. Introducing additional protections for those investing or using financial products, to improve safety and support the victims of APP scams. The Bill will include legislation to enable the Payment Systems Regulator to require banks to reimburse authorised push payment (APP) scam losses.

The Government notes that other benefits of the Bill will include the 'safe adoption of cryptocurrencies and resilient outsourcing to technology providers.' So it is likely that amendments to the Electronic Money Regulations 2011 and the Payment Services Regulations 2017, amongst others, will be contained within the Bill to bring stablecoins within the regulatory framework as set out by HM Treasury. Read more on stablecoin regulation.

• Data Reform Bill — is likely to set out how the UK will reform the onshored GDPR whilst trying to maintain adequacy with EU. It will be designed to create a clearer regulatory environment for `smart data' schemes that could help drive the adoption of Open Finance.
• Economic Crime & Corporate Transparency Bill — enabling businesses in the financial sector to share information more effectively to prevent and detect economic crime.
• Audit Reform Bill — strengthening of corporate governance (including controls / 'UK SOx') to be implemented via the formation of Audit, Reporting & Governance Authority (ARGA), expanding the scope of transparency requirements for very large unlisted companies and increased regulation of Director accountability.
• Digital Markets, Competition & Consumer Bill — will allow Digital Markets Unit to designate BigTech firms as having 'Strategic Market Status', thereby obliging them to not abuse their dominant positions at the expense of consumers and other businesses.
• Brexit Freedoms Bill — creating new powers to strengthen the ability to amend, repeal or replace the large amounts of retained EU law without the need to always resort to primary legislation.

KPMG Regulatory Horizon helps firms stay on top of the ever-changing regulatory landscape.