The Financial Services Bill was first announced by chancellor George Osborne in his Mansion House speech in June 2010, a month after the coalition came into power, and the Bill completed its journey to becoming law when it received Royal Assent in December 2012.
Well, it comes into force from 1 April this year to deliver fundamental reform to financial regulation in the UK.
The new Act will amend the three current Acts that regulate the financial sector, namely the Bank of England Act 1998, the Financial Services and Markets Act 2000 and the Banking Act 2009.
It will also address one of the key weakness of the current system; the lack of a single institution with authority and responsibility for the wellbeing of the UK economy. The current tripartite system splits the responsibility between the Bank of England, the FSA (Financial Services Authority) and the Treasury.
As part of the Act, the Bank of England is being given complete control, with the FSA being dismantled.
Under the new system, the Financial Policy Committee (FPC) will be created within the Bank of England, with the task of monitoring risks to the economy.
Working alongside the FPC will be the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). These two new financial regulators will effectively replace the FSA. So there’s plenty of new acronyms to be aware of!
The PRA will be responsible for the day-to-day supervision of financial institutions, with the remit of challenging business models, identifying risks and taking actions to preserve stability. While the FCA will have a strong role in promoting competition, confidence and transparency in financial services, and in giving better protection to consumers. It will also take over the FSA’s role as a securities regulator enforcing the listing rules, disclosure and transparency rules, and the prospectus rules, as the competent authority referred to as the UKLA (UK Listing Authority).
The UKLA is responsible for maintaining the list of all securities approved for trading on exchanges in the UK, as well as for monitoring and enforcing compliance with the prospectus rules, the listing rules and the disclosure and transparency rules. A number of listed entities are also PRA-regulated firms.