Free access to cash protection added to the Act

The Financial Services and Markets Act 2023 received royal assent on 29 June, the Finance Innovation Lab reported, meaning the legislation previously known as the Financial Services and Markets Bill became an Act of Parliament¹. The Act sets the framework for how the UK's financial services industry will be regulated, and was drawn up in response to the UK's exit from the European Union¹.

The access to cash provisions were strengthened during the Bill's passage through Parliament. Which? argued that securing access to cash is not enough on its own, because vulnerable cash users often pay charges to reach their money, and after MPs and peers echoed that argument the government made the amendment needed to protect free cash access through the Act¹. The legislation as drafted by the Treasury had been intended to secure access to cash and to enable credit unions to provide a greater range of products¹.

The Act also delegates substantial rulemaking powers to the financial services regulators, primarily the Financial Conduct Authority and the Prudential Regulation Authority¹. It adds a statutory objective on "growth and international competitiveness" to the regulators' duties, which the Finance Innovation Lab says it has consistently argued is inappropriate and a risk to regulatory independence, consumer protection and financial stability; more than 50 economists and policy experts agreed the government's approach was problematic¹. The final wording covers the competitiveness of the overall economy, with what the Lab calls a troublesome focus on the competitiveness of the financial services sector, rather than solely the sector's own competitiveness¹.

On climate and nature, the government expanded the scope of a net zero regulatory principle so that it explicitly refers to nature protection targets in the Environment Act 2021 as well as the UK's net zero target¹. A proposed mandatory due diligence requirement on financial institutions to prevent financing of illegal deforestation, backed by institutions representing more than £2.7tn in assets under management and by a majority in the House of Lords, was rejected in the Commons, with the government instead offering a Treasury-led review into deforestation finance¹. A separate campaign led by Fair By Design to give the FCA a duty to consider financial inclusion in the round was backed by a majority in the House of Lords, but the minister refused to support it at the Commons vote¹. The Lab says the FCA currently has no requirement to consider financial inclusion in the round, which it says limits the regulator's proactive work on inclusion¹.

Why it matters for households

The protection written into the Act concerns free access to cash, not just the existence of cash services, so the terms on which people withdraw money are the point at issue¹. The Act took effect on royal assent on 29 June¹. The FCA and the PRA gain delegated rulemaking powers under the new framework, and how they interpret the new competitiveness objective will shape regulation from here¹. The FCA has no duty to consider financial inclusion in the round, and the attempt to add one failed at the Commons vote¹. The Treasury-led review into deforestation finance is a commitment recorded by the Lab; its timing and terms have not been reported¹.

What happens next

The Lab says the Act is a starting point as well as an end point, and that continued reviews, consultations and reform efforts on specific policy areas, pensions among them, can be expected under the new framework¹. It adds that the Opposition has indicated financial inclusion will remain a priority for it¹.