06/11 Proposals for new regulatory structure published

Financial services alert email

Friday 17 June 2011

Yesterday, the Government published its White Paper and draft text of the Financial Services Bill, detailing the proposed changes to the UK financial regulation system.

Feedback received from the recent Consultation in February has been used by the Government to inform the proposals outlined in its Paper. Notably, three additional policy proposals have been introduced as a result of this consultation process. These are:

  • a specific statutory objective governing the Prudential Regulation Authority's responsibilities for the insurance sector;
  • an enhanced competition regime under the Financial Conduct Authority; and
  • steps to improve the handling of cases of widespread consumer detriment, including mis-selling.

The draft Financial Services Bill will play a key role in the execution of the proposed reform, as it provides the measures necessary to set up the three new regulatory bodies; the Financial Policy Committee, the Prudential Regulation Authority and the Financial Conduct Authority. It makes a number of extensive amendments to the existing Financial Services and Markets Act 2000 (FSMA), in addition to altering a number of provisions in key banking legislation. A consolidated version of the amended FSMA is expected to be made available soon.

Next steps

There will now be a further period of consultation in relation to some specific aspects of the reform proposals. Responses are to be submitted no later than 8 September 2011.

The White Paper signals the beginning of the Parliamentary phase of the legislative process. It is hoped that the Bill will be formally introduced into Parliament before the end of this year. We will keep you updated with the progress of this legislation.