Financial Services: Environment Protection
The question
To ask the Chancellor of the Exchequer, pursuant to the Answer of 7 May 2025 to Question 48449 on Financial Services: Environment Protection, which municipal green investment (a) bonds and (b) loans being offered by local authorities in England are regulated by the (i) Financial Conduct Authority, (ii) Prudential Regulation Authority, (iii) Financial Ombudsman Service and (iv) Financial Services Compensation Scheme.
Answered by James Murray
The Financial Services and Markets Act 2000 establishes a framework whereby any person, whether an individual or firm, can only carry out a regulated activity by way of business if they are authorised by the appropriate regulator or are exempt from the authorisation requirement. Under this framework, the government determines which activities are regulated activities, by specifying them in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO).
Where local authorities are the issuers of bonds, or borrowers under loans, they themselves would not require authorisation from a financial services regulator to act in that capacity, and would not be subject to regulation by the financial services regulators.
Financial services firms facilitating access to such funding by local authorities may, depending on the circumstances, be subject to regulation by the Financial Conduct Authority, and investors may be eligible to refer disputes with the regulated firm to the Financial Ombudsman Service. Depending on the precise circumstances of any products offered, compensation in the case of default may be available under the Financial Services Compensation Scheme, but this may not always be the case.
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