Financial Services and Markets Bill published

The government published the first draft of the Financial Services and Markets Bill on 20 July 2022, containing measures on access to cash, reimbursement for authorised push payment (APP) scam victims, regulation of certain stablecoins, a wider product range for credit unions and the repeal of hundreds of pieces of retained EU legislation¹. The bill is due to have its second reading in the House of Commons on 7 September, and it is anticipated it will not come into force until next year, presuming it clears all parliamentary hurdles¹.

On cash, the bill will make cash provision a matter regulated by the Financial Conduct Authority, which will be given new powers to enforce this and could stop banks and building societies from closing cash access services if there was no suitable alternative¹. Further details, such as the criteria for cash provision and geographic distances, will be set out by the Treasury in a policy statement¹. Link, the UK's largest cash machine network, estimates 5.4m people still rely on cash, and almost half of the UK's bank branch network has closed since 2015, with a further 146 branches earmarked for closure since the measures were announced in the Queen's Speech in May¹.

On fraud, the bill will allow the Payment Service Regulator to use its existing powers to require firms to reimburse victims of APP scams, where someone is tricked into transferring money to a fraudster¹. Many banks have signed up to a voluntary reimbursement code, but the article reports that victims can face a lottery depending on who they bank with, and there are concerns about it being applied inconsistently or victims being unfairly blamed¹. It reports that more than £700,000 is lost to bank transfer scams every day¹.

Regulation is set to be introduced for certain types of stablecoins, paving the way for them to be used as a form of payment in the UK; a stablecoin is a cryptocurrency with a value fixed to another asset, often currencies¹. The bill will also allow credit unions to offer a wider range of products, such as car finance and insurance policies with partner insurance firms, subject to obtaining permission from the FCA to carry out any regulated activity¹. There are more than 500 credit unions in Britain, governed under the Credit Unions Act 1979, and restrictions mean they primarily offer savings accounts and loans to their members¹.

The bill is also set to repeal hundreds of pieces of EU legislation left after the UK's exit from the EU, and includes a new "rule review" power allowing ministers to direct regulators, including the Bank of England, to review their rules where it is in the public interest; ministers will not be allowed to overrule them¹.

Why it matters for households

The measures would affect people who depend on cash, users of bank transfer payments, holders of certain stablecoins and credit union members. The cash provisions would place access to cash rules with the FCA, which could prevent closures where no suitable alternative exists, though the criteria and distances are still to be set by the Treasury¹. For scam victims, the change would move reimbursement from a voluntary code to a requirement the Payment Service Regulator can impose on firms, which the article says currently produces inconsistent outcomes¹. Credit union members could see credit unions offer products beyond savings and loans, subject to FCA permission¹. The repeal of retained EU law and the new rule review power concern the wider financial regulation framework and post-Brexit rules¹. None of this applies yet: the bill was published on 20 July and is not expected to come into force until next year¹.

What happens next

The second reading in the House of Commons is due on 7 September, the first chance MPs have to debate the main principles of the legislation¹. It then proceeds to committee stage, where each clause and any amendments may be debated, followed by a third reading, passage through the House of Lords and Royal Assent¹.