This was in response to suggestions made by the Treasury Select Committee in its report ‘The Work of the Financial Conduct Authority: The Perimeter of Regulation’, published in August.
In the report, the committee said the regulator should be given the power to recommend changes to its perimeter of regulation in order to “enhance its ability to meet its objectives” and “prevent consumer harm”.
In response, the government said it did not see a case for providing the FCA formal power as it already engaged with the regulator regularly, resulting in a number of financial services activities coming under regulation.
However, the government also said it would be holding discussions with the FCA to consider giving it the authority to collect data from non-regulated entities.
This was in response to the committee’s recommendation that as the Financial Policy Committee (FPC) had requested the power to obtain additional information from unregulated entities to help meet its objectives, the same should be replicated for the FCA.
The government said as Parliament had decided the FCA should focus on regulating authorised firms, this would “add significantly” to its existing responsibilities, therefore reducing its ability to supervise regulated firms.
It said this would be a “significant change to the FCA’s remit,” adding that “important considerations need to be taken into account” during its discussions on whether to allow the regulator to do so.
As for the Treasury’s recommendation that the FCA should be able to provide warnings on financial services outside of its remit without feeling constrained, the government said the regulator already exercised this right on a regular basis, issuing 521 consumer alerts in 2018.
In response, Catherine McKinnell MP, interim chair of the Treasury Committee, said: “It is disappointing that the government does not see the case for providing a formal power for the FCA to request changes to the perimeter.
“It would formalise the relationship that the committee are told already exists between ministers, officials and the FCA, thus providing greater transparency to the process.”
She added: “The Treasury Committee will continue to raise these issues in our evidence sessions with HM Treasury and the FCA.”