Queen’s Speech 2022: FinTech highlights
By Rolf Merchant, Head of Public Affairs, & Rachel Waggott, Head of Regulatory Affairs
The Queen’s Speech saw a number of pieces of legislation announced that will interest financial services and FinTech. There will be six key bills for the sector to track over the forthcoming parliamentary session. We’ve summarised the government’s legislative plan below, highlighting the most relevant pieces for FinTech.
Financial Services and Markets Bill
The government has committed to introducing new financial services legislation, as part of its ongoing aim to maintain the global leadership of the UK’s financial sector.
The area of the Bill that focuses on authorised push payment (APP) scams will interest FinTechs. The Bill clarifies that the PSR may use its existing regulatory powers to require reimbursement in cases of APP scams in designated payment systems, including Faster Payments. This is an important issue for FinTechs that are payment services providers. We have expressed concerns about the proposed approach of the PSR on reimbursement for APP scams, and will be tracking the details of this element of the Bill closely.
Much of the meat of the Bill will be about strengthening the UK financial services sector’s footing against international competition. UK regulators will have specific objectives to support the growth and international competitiveness of the sector.
Reform of Solvency II was widely trailed and we can expect further changes to capital markets regulation to help stimulate investment in the UK. We await the details, but these are promising moves that should help the FinTech sector.
Importantly, the government has made a stated aim of the Bill to harness the opportunities of innovative technologies in financial services - a clear nod to FinTech. A concurrent objective for the Bill is to support the safe adoption of cryptocurrencies, which the Economic Secretary John Glen MP spoke about at IFGS 2022 in April.
Finally, the Bill’s focus on maintaining access to cash is not a surprise, given the issue’s prominence in recent years.
You can read HM Treasury’s announcement on the Bill here.
Data Reform Bill
The government’s aims for this Bill are to create a new and trusted UK data protection framework that reduces burdens on businesses, boosts the economy, helps scientists to innovate and improves the lives of people in the UK. It also aims to increase industry participation in Smart Data Schemes, which will give citizens and small businesses more control of their data.
The main focus of this Bill will certainly be on reform to GDPR. The summary in the Queen’s Speech does not provide us with much information on what reform will look like, save for the government’s overarching desire to reduce burdens on businesses and clarifying how data can be used.
The aim to increase the uptake of Smart Data is important for FinTech, as Open Banking and Open Finance are among the UK’s leading open data schemes. Open Banking has already shown how innovation can be unlocked with data sharing, so moves to create a cross-sector ‘Smart Data economy’ are welcome. You can read our views on what FinTechs will want to see in a Smart Data future here.
Online Safety Bill
This Bill - which has already attracted considerable debate - has been carried over from the previous session. The main aims of the Bill are related to protecting children from harmful online content.
However, there is an area of interest for financial services and FinTech, concerning online fraud and scams. The Bill will require large social media platforms and search engines to prevent the hosting or publication of fraudulent paid-for advertising. We hope that this will be an important step in reducing APP scams at source (see above) so that consumers are less likely to be defrauded - a more sustainable, long-term solution than banks having to reimburse victims.
Brexit Freedoms Bill
The Government has committed to “lightening the regulatory burden to boost UK businesses”. This Bill will allow the Government to more easily unpick and amend the onshored EU law currently on the statute book to better suit the UK - improving the nimbleness and competitiveness of the UK, while maintaining high standards.
Future regulation will be made in line with the principles set out in HMT’s Future Regulatory Framework Review consultations. You can read our response to the latest HMT consultation on this subject here.
Draft Digital Markets, Competition and Consumer Bill
Creating a ‘best in class’ competition regime is the central aim of this draft Bill. Two key aspects of the draft Bill are:
The Competition and Markets Authority will be empowered to decide for itself when consumer law has been breached and issue monetary penalties for those breaches.
The Digital Markets Unit (DMU) will be given new powers to proactively address the root causes of competition issues in digital markets, including imposing interventions to inject new competition in the market. We expect obligations on tech firms to report new mergers and give consumers more choice and control over their data. Additionally, the DMU will be able to designate a small number of firms with ‘Strategic Market Status’ – i.e. firms that are very powerful in particular digital activities, such as social media and online search – with the aim of preventing these firms from abusing their market dominant positions as the expense of consumers and other businesses.
Economic Crime and Transparency Bill
This is a wide-ranging Bill to tackle illicit finance and reduce economic crime. Key points of interest include the introduction of new powers to more quickly and easily seize and recover crypto-assets, which the government considers to be the principal medium used for ransomware.
Companies House will be given more effective investigation and enforcement powers. The accuracy of data held by Companies House will be strengthened by the introduction of identity verification for people who manage, own and control companies and other UK registered entities. Better cross-checking of Companies House data with other public and private sector bodies will also be introduced.
The government intends to enable businesses in the financial services sector to share information more effectively to prevent and detect economic crime. There is limited substantive detail on this point, and we will keep you updated as more details emerge.
Got views? Get in touch
We’re keen to hear from our members and wider network about the contents of the Queen’s Speech.
If you have views or concerns, please free to email us with your thoughts at firstname.lastname@example.org