Regulatory framework: the Financial Services Authority
A new system for regulating insurance business (and most other parts of the financial services industry) in the United Kingdom came into force on 1 December 2001 when the main provisions of the Financial Services and Markets Act 2000 (FSMA 2000) and the associated secondary and tertiary legislation were fully implemented. On that date, the FSA formally took over responsibility for all aspects of financial regulation and the previous legislation (mainly the Financial Services Act 1986 but also the Banking Act 1987 and the Insurance Companies Act 1982) was repealed. However, the underlying principles of the supervision of insurance companies in the UK have remained unchanged for many years. Companies must be run by ‘fit and proper individuals’ and they must retain a significant margin of solvency at all times.
The Corporation Tax Acts as they apply to insurance business and other financial services make extensive use of concepts and definitions drawn from financial regulatory legislation and related statutory instruments. References to previous legislation have been replaced in SI2001/3629 by new references to concepts and definitions in FSMA 2000, in associated statutory instruments and in the Rules made by the FSA and included in its Handbook.
The text of the legislation referred to in this Chapter can be found in Butterworth’s Insurance Law Handbook. The statutory instruments are also to be found on the OPSI (formerly HMSO) and HM Treasury websites. The FSA Handbook including the various sourcebooks, for instance the Prudential Handbook for Insurers, INSPRU, can be found on the FSA’s website at .