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On 26 January, the Government introduced the Financial Services Bill to Parliament. This is a key piece of legislation which will fundamentally reform the regulation of UK financial services. The Bill:
- puts the Bank of England clearly in charge of financial stability
- provides for focussed prudential and conduct of business regulators (the Prudential Regulation Authority or PRA, and the Financial Conduct Authority, or FCA)
- places the judgement of expert supervisors at the heart of regulation
The Bill is currently progressing through Parliament, and the Government aims for the new regime to be in place on 1 April 2013, subject to the Parliamentary timetable.
A new approach to financial regulation: draft secondary legislation is a consultation document on the key secondary legislation that will underpin the Bill:
- Section 22A of the Financial Services and Markets Act 2000 as amended by the Bill (“FSMA”), covering the allocation of regulator responsibility between the PRA and the FCA;
- Section 55C of FSMA, setting out the threshold conditions that authorised persons must meet in order to become and remain authorised;
- Clause 47 of the Bill, transferring regulation of mutual societies to the PRA and FCA;
- Section 192 A-N of FSMA regarding the regulators’ power of direction and information gathering rules over parent undertakings of authorised persons or recognised UK investment exchanges and, by virtue of Schedule 7 of the Bill, recognised UK clearing houses;
- Section 213 of FSMA on the allocation of responsibility for rule-making with regards to the FSCS between the FCA and PRA; and
- Section 234B of FSMA on the power to designate bodies that can make super-complaints about the impact of the market in the UK for financial services on the interests of consumers.
The Government will subsequently lay these instruments for Parliamentary scrutiny once the Financial Services Bill has achieved Royal Assent, reflecting the views of consultation respondents where appropriate.
The consultation will close on 24 December 2012. We would particularly welcome responses from financial institutions and consumer representative bodies.