Queens Speech announces financial services reforms

11th May 2022

A Financial Services and Markets Bill aimed at cutting red tape was among the flagship measures announced in the Queen’s Speech.

The new bill revokes retained EU law on financial services and updates the objectives of the Financial Conduct Authority and the Prudential Regulation Authority to bring about a greater focus on growth and international competitiveness. It will also help to protect people from scams, with additional protections for those investing or using financial products. Under this bill, the Payment Systems Regulator will be able to require banks to reimburse authorised push payment.

David Postings, Chief Executive of UK Finance, said “We strongly welcome the announcement in the Queen’s Speech that the government will bring forward a Financial Services Bill and a further Economic Crime Bill, which we see as two key pieces of legislation for financial services. The Financial Service Bill provides the opportunity to tailor the UK’s regulatory framework and so create a more competitive financial services sector post-Brexit, supporting jobs and investment across the country.”

“The Economic Crime Bill will be critical in helping to address money laundering and the growth in fraud and scams, which are now the most prevalent type of crime in the UK. This Bill should focus on measures that prevent fraud happening in the first place and provide greater enforcement powers to tackle those who commit economic crime. We look forward to working with the government and parliament on the development of the detailed proposals in both Bills.”

Christina Fitzgerald, President of insolvency and restructuring trade body R3,said “The Government has taken a major step forward in its plans to reform Companies House – something we have long campaigned for – by announcing it will legislate for these changes through the Economic Crime and Corporate Transparency Bill during this parliamentary session.”

“Reform of Companies House is critical to the insolvency and restructuring profession’s efforts in the fight against fraud, and will be hugely beneficial to our profession’s work to recoup funds fraudulently claimed under the Government’s COVID support schemes.”

“However, this legislation needs to be introduced quickly and there are some issues that need to be resolved before the Bill reaches the Statute Book. When appointed to deal with an insolvent company, insolvency practitioners need to be given automatic access to all of the information captured by Companies House about the company and its directors. This isn’t part of the Bill at the moment, but making access to this information automatic would make it easier to investigate director misconduct and uncover assets for the benefit of the company’s creditors.”

“Despite these issues, the clear commitment the Government has made to reform Companies House is welcome. These reforms will benefit victims of fraud, creditors and the wider economy once they are introduced – something we hope will happen as soon as possible.”

The Queen’s Speech also promised to introduce legislation to protect people’s access to cash as banks continue to cut branches and free cash machines close.

Announcing the promised measures, economic secretary to the Treasury John Glen said “We know that access to cash is still vital for many people, especially vulnerable people. We promised we would protect it, and we are delivering on that promise.”

Natalie Cheney, Chair of the Access to Cash Review said “Today’s announcement to legislate to protect cash is a huge step forward.” She added: “We owe it to the public, small businesses and the communities they live in to see this through and get the legislation on the statute book.”

Commenting on the draft Energy Security Bill Ofgem CEO Jonathan Brearley said “At a very difficult and pivotal time for consumers up and down the country, the Energy Bill provides a clear direction of travel to boost our clean home-grown energy, reduce reliance on global fossil fuels, and drive us towards a secure and carbon neutral future. As laid out today, Ofgem is ready to play our role in this, helping to create and invest in the infrastructure for net zero to thrive, building robust local energy systems and spearheading innovative technologies such as carbon capture and storage. We look forward to working with government and wider industry and NGO partners to make the proposals laid out today a reality.”

Whilst Simon Virley CB, Vice Chair and Head of Energy and Natural Resources at KPMG said “The measures set out today in the draft Energy Security Bill are all welcome steps to building a low carbon economy over the longer term.  But there is nothing in the draft Bill that will help consumers with the cost of living crisis in the short term, or help improve energy efficiency, which is the most cost-effective way to permanently reduce energy bills, lower carbon emissions and reduce our dependence on imported oil and gas.”

Commenting on the announcements Sarah Coles, Senior Personal Finance Analyst, Hargreaves Lansdown said “For millions of people, the bills they wanted to hear about today were their energy bills – and how the government was going to help them cover the costs. And while there were all sorts of bills mentioned – including welcome developments on protecting access to cash and helping the victims of scams – there was no indication of any more practical help for anyone wrestling with runaway household costs.”

“There was a brief mention that the government would prioritise helping to ease the cost of living for families, but then no actual bills announced outlining how. This is likely to fuel ongoing rumours of a potential emergency Budget.”

“The only energy bill which got a mention was the government’s plan for the transition to green energy. It’s worth noting that part of this bill is likely to cover the future of the energy price cap beyond next year. When it consulted on the options, it suggested that the cap might be updated more regularly, so the industry isn’t so badly affected during times of energy price hikes, and bill-payers benefit more quickly when prices drop back. Technically, during some periods this would leave us better off, but in the short-term it would be likely to mean prices rise more quickly. Alternatively, Ofgem could be given the right to hike bills in the middle of a capped period if we see the kinds of shocks to the energy market we’ve seen recently.”

“We did see some movement on the government’s promise to protect access to cash, because the Financial Services and Markets Bill will cover high street branches and cash machines. Of course, an awful lot will depend on how far this goes, and whether it will be enough to protect the most vulnerable people who rely on cash.”

“There was good news for scam victims, because the Financial Services and Markets Bill will oblige banks to repay the victims of so-called ‘authorised push payment’ fraud. This is where a criminal convinces you to transfer money into their account. Often they’ll call, pretending to be from your bank, warning that your account is being targeted by scammers, and they’ll persuade you to move your money into a ‘safe account’. In reality this account belongs to the scammers, who disappear with your money. This kind of fraud has mushroomed in recent years – growing 71% in the first half of 2021 alone to £355 million. This change will hopefully help ensure that one small mistake doesn’t rob people of their financial security forever.”