The Need & Development of Regulation Flashcards
What is regulation & why is it necessary?
Regulation compromises of sets of rules, restrictions and guidelines applicable to financial and investment organisations
Necessary to maintain efficient, orderly & fair financial markets (national & international)
It protects consumers from abusive practices & financial crime thus maintaining integrity of financial markets
What does regulation prohibit?
Only experienced professionals (fit & proper) can provide financial services business
Regulation prohibits anyone not approved by regulators from providing it and sets out what organisations can/ can’t do
Regulation provides those who don’t meet required standard be prevented from operating or sanctioned where appropriate
The development of the FSA (financial services authority)
May 1997, supervision of banking and investment services merged into securities & investment board (SIB) / Oct 1997 name change to FSA
Responsibility for:
- banking supervision transferred from Bank of England
- UK listing authority from London stock exchange
- FSMA 200 transferred (investment management regulatory, personal investment, securities authority)
- 2005 regulation of general insurance business to implement EU directives
Formation of FCA & PRA
June 2011 - Chancellor of Exchequer announced gov intention to restructure the U.K financial regulatory framework by replacing FSA with 2 new bodies (1 April 2015)
FCA - responsible for regulation of conduct of retail and wholesale financial markets & infrastructure that supports it
PRA - subsidiary of Bank of England responsible for regulating deposit taking businesses, insurers & investment banks
