Financial services regulation

Supporting detail:

Reforming the way financial services are regulated and supervised in the UK

The Financial Services Act 2012 came into force on 1 April 2013. The Act made some fundamental changes to the way that financial services firms like banks are regulated.

Financial Policy Committee

We’ve established a new macro-prudential regulator, the Financial Policy Committee (FPC), within the Bank of England. The FPC has powers to ensure emerging risks and vulnerabilities across the financial system as a whole are identified, monitored and effectively addressed.

We published a consultation document in 2012 about the macro-prudential tools that the FPC should be given and have published legislation setting out these tools. These tools give the FPC the power to direct the Prudential Regulation Authority to increase the capital that UK banks are required to hold in certain circumstances.

Prudential Regulation Authority

As of 1 April 2013, we have set up a new regulator, the Prudential Regulatory Authority (PRA), as a part of the Bank of England.

The PRA supervises all firms that manage significant risks as part of their businesses – banks and other deposit takers, insurance companies, and large investment banks.

Financial Conduct Authority

As of 1 April 2013 we set up a new business regulator, the Financial Conduct Authority (FCA). The FCA has more powers to protect consumers, such as the ability to ban products and publish details of misleading advertisements for financial products or services.

New powers for the Chancellor to direct the Bank of England

We’ve clarified the government’s responsibilities in a financial crisis. It gives the Chancellor of the Exchequer powers to direct the Bank of England if public funds are at risk and there is a serious threat to financial stability.