Understanding corporate finance: the legal and regulatory framework: overview
The legal and regulatory framework of corporate finance
All companies operate within a legal framework. In addition, companies in the financial sector are subject to regulatory rules intended to protect the stability of financial markets and protect consumers.
How to regulate the financial sector is currently a subject of some debate and it is possible that the framework described in this section may be subject to change.
CFM14020 to CFM14050 explain the key features of the legislative framework.
CFM14060 to CFM14090 explain the key types of regulated entity - banks, building societies and collective investment schemes.
CFM14100 onwards explains one of the key purposes of regulation - the management of risk and in particular the concept of regulatory capital - the requirement that firms operating in the financial sector have a certain level of capital to back up the business they conduct.
More details on the regulatory framework for insurers are set out in more detail in HMRC’s Life Assurance Manual (LAM), General Insurance Manual (GIM), and Lloyd’s Manual (LLM).