As previously reported, on 19 March 2014, George Osborne, Chancellor of the Exchequer, delivered the 2014 Budget.

This legal update summarises the key measures in the 2014 Budget of interest to financial services practitioners (some of which have previously been launched or announced by the government).

All of the government papers relating to the 2014 Budget are available on its website.

For a general summary of the key business tax announcements (which includes some financial services measures), see Legal update, 2014 Budget: key business tax announcements and for our full sector and practice area analysis on the 2014 Budget, see Practical Law 2014 Budget.

The government has provided the Bank of England's (BoE) FPC with its remit and recommendations for the coming year, by way of a letter (dated 19 March 2014) from the Chancellor to Mark Carney, BoE Governor. The Bank of England Act 1998 (as amended by the Financial Services Act 2012 (FS Act)) requires the Chancellor, on an annual basis, to specify what the economic policy of the government is and to make recommendations to the FPC about matters it should regard as relevant to its understanding of the BoE's financial stability objective. The remit and recommendations are set out in an annex to the letter.

Among other things, in the letter the Chancellor welcomes the FPC's decision to focus its work programme over the next 12 to 18 months on three key priorities:

The Chancellor is pleased that the FPC's agenda closely matches that of the Financial Stability Board (FSB), as it is important that the UK is both at the forefront of shaping international standards and in implementing them in the UK. The FPC should also continue to work closely with the PRA and FCA on these priorities.

The FPC's policy recommendations should be supported, wherever practicable, by a published assessment of the costs and benefits, as required under the Bank of England Act. The Chancellor considers that this will be particularly important in the context of the impact assessments of the FPC's proposals for the medium-term capital framework and ending too big to fail. Further progress in these priority areas, both domestically and internationally, is crucial if the UK is to finish putting in place a robust system of financial regulation that safeguards financial stability, while continuing to promote greater competition and choice for users of financial services.

In addition, the FPC and the Monetary Policy Committee (MPC) should continue to have regard to each other's actions, to enhance co-ordination between monetary and macroprudential policy.

The government made a number of announcements relating to supporting competition in the banking system, including:

For more information, see Legal update, 2014 Budget: competition and regulatory announcements.

As announced on 26 November 2013 and taking effect from that date, the government will introduce legislation in the Finance Bill 2014 to amend a corporation tax rule on loan relationships to include cases where a debt is released as a result of the application of any of the stabilisation powers under Part 1 of the Banking Act 2009.

For information on the stabilisation powers, see Practice note, Banking Act 2009: an overview: Part 1: Special resolution regime (sections 1-89) (stabilisation powers).

The government announced major changes to the way that members of defined contribution (DC) pension schemes can access their pensions savings, and published a related consultation paper. For more information, see Legal update, 2014 Budget: key pensions announcements).

As part of these reforms, the government wants to ensure that individuals are equipped to make decisions that best suit their personal circumstances (see chapter 4 of the consultation paper). As a result, it will introduce a new guarantee that everyone who retires with a DC pension will be offered free, impartial and high quality face-to-face guidance on their choices at the point of retirement (referred to as the "guidance guarantee"). This will take effect from April 2015. To deliver this, the government will also introduce a new duty on pension providers and trust-based pension schemes to offer the guidance guarantee.

The FCA has been asked to ensure that the guidance meets "robust standards", working closely with the Pensions Regulator, the Department for Work and Pensions (DWP) and consumer groups.

Comments can be made on the proposals until 11 June 2014.

Separately, the government welcomes the FCA's recent decision to conduct a market study into the retirement income market, and looks forward to its findings and the remedies the FCA may propose (see Legal updates, FCA reports on thematic review of annuities and FCA launches market study to examine retirement income).

The government announced reforms to the bank levy, following its 2013 review (see Legal update, Bank levy review 2013). It also announced plans to redesign the charging mechanism of the bank levy. The detailed proposals will be set out in a consultation paper that is expected to be published on 27 March 2014. For more information, see Legal update, 2014 Budget: key business tax announcements: Bank levy banding.

HMRC has published an updated list of banks that have unconditionally adopted its code of practice on taxation for banks.

In addition, the government referred to its proposal for the Finance Bill 2014 to provide for HMRC publishing an annual report on operation of the code. For more information, see Legal update, 2014 Budget: key business tax announcements: Code of Practice on taxation for banks.

The government has reviewed the progress the industry has made on developing simple financial products. It welcomes the trade associations' commitment to have an accreditation framework in place by the end of 2014. For more information, see Legal update, HM Treasury progress review of industry work on simple financial products.

The government will amend section 221 of the Finance Act 2012 to ensure that regulations can be made to set out the tax treatment of Solvency II-compliant capital instruments in advance of the regime under the Solvency II Directive (2009/138/EC) coming into force.

Subject to the outcome of the Organisation for Economic Co-operation and Development's (OECD) base erosion and profit shifting project, the government will make regulations to ensure that insurers' Solvency II instruments that are issued in the form of debt are taxed as debt instruments, as the tax treatment of these instruments is uncertain. These reforms will be included in the Finance Bill 2014.

For information on Solvency II, see Practice note, Solvency II: an overview.

The government will increase the resources available to promote financial services trade and investment by £2.8 million in 2014/15 and £2.8 million in 2015/16. It will also shortly publish the board's first annual progress report and "forward look".

For more information on the board, see Legal update, Financial Services, Trade and Investment Board appoints members.