Today, the Government published a White Paper and draft Bill setting out its detailed blueprint for reform of financial regulation in the UK.  The White Paper also poses further questions for consultation, and provides a summary of responses to the earlier consultation published in February

The draft Bill will undergo 12 weeks of pre-legislative parliamentary scrutiny once a scrutiny committee has been established. The consultation on the White Paper closes on 8 September 2011, and it is envisaged that a Bill will be introduced into Parliament before the end of this year. 

This briefing highlights the key points of the White Paper and the next steps.

Key points

  • Many of the Government's previous proposals have been taken forward into the draft legislation. Several new features have, however, been introduced, including:
    • A new insurance objective for the PRA, requiring it to contribute to securing an appropriate degree of protection for those who are, or may become, policyholders.
    • A new power for the FCA to require the OFT to consider whether structural barriers or other features of the market are creating competitive inefficiencies in specific markets.
    • The proposed power for the FCA to order skilled persons reports will apply in respect of sponsors, as well as to issuers.
    • A range of organisations (including the FOS) will have the power to bring issues causing significant detriment to the FCA’s attention, and the FCA will be required to consider appropriate action, including consumer redress.


  • Responses to the Government's earlier consultation supported the Government's plan to establish the Financial Policy Committee (FPC) as a committee of the Bank of England; an interim FPC has been formed and is due to publish its first Financial Stability Report on 24 June.
  • The FPC's objective remains as proposed, to contribute to the Bank of England's objective to protect and enhance financial stability, through identifying and taking action to remove or reduce systemic risks, with a view to protecting and enhancing the resilience of the UK financial system.
  • In exercising its functions, the FPC must:
    • not act in a way that it believed would be likely to have a significant adverse impact on economic growth; and
    • have regard to proportionality, openness and international law.
  • HM Treasury will be able to make recommendations about how the FPC should pursue its objective and to suggest other factors that the FPC might consider.  


The functions originally outlined for the FPC remain essentially the same, namely to:  

  • monitor the stability and resilience of the financial system, with a view to identifying and assessing systemic risks; and
  • use the following tools to address those risks:
    • public announcements and warnings (eg, to publicise a concerning trend in financial services);
    • influence of macro-prudential policy at the European and international levels;
    • issue recommendations to bodies other than the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) (legislation will specify particular examples where the FPC can make recommendations in relation to specific relevant functions); and
    • powers over the PRA and FCA to:
      • make recommendations (backed up by a comply-or-explain mechanism), eg, recommend that firms disclose certain information; and
      • direct the PRA and FCA where explicitly provided for by macro-prudential tools (eg, variable risk weights and liquidity tools) designed in secondary legislation.
  • The FPC will not have direct powers over regulated firms. Directions and recommendations from the FPC to the PRA and FCA cannot be directed specifically at an individual firm. Given the concentration of the UK financial services sector, this may not prevent a measure designed to preserve financial stability more generally from in practice catching the behaviour of a very small number of large institutions (perhaps one or two).  

Macro-prudential tools

  • Respondents had expressed concerns about the untested nature of macro-prudential tools and how they will work in practice (and in conjunction). The interim FPC is undertaking analysis of potential macro-prudential tools – although there is no indication of the nature and extent of the analysis being performed. Concerns have been expressed about the limitations of some modelling undertaken internationally to date in relation to some of the proposed tools.
  • The interim FPC will update HM Treasury on its thinking in time for the introduction of the Bill to Parliament later this year, and again at the Committee stage consideration in the House of Commons (end Q1 2012).
  • The Government is concerned that the new European capital requirements should not prevent national authorities such as the FPC from exercising their own discretion in the use of such tools to address systemic risk in their own jurisdictions.  

Membership, governance, transparency and accountability

  • The Government will gather further views during pre-legislative scrutiny of the draft Bill on concerns raised in respect of the heavy Bank of England weighting in the proposed composition of the FPC.
  • Both the Government and the Bank of England remain committed to ensuring an appropriate balance and breadth of expertise in the FPC.
  • The draft Bill envisages that the FPC will publish two Financial Stability Reports (FSRs) a year, including a summary of its activities and an assessment of the effectiveness of its actions in the period since the last report. It will also publish a record of its meetings within six weeks.
  • The FPC will however be able to exclude confidential or market sensitive information from meeting records or the FSR.  

Bank of England

  • Against the background of the Treasury Select Committee's inquiry into the Bank's accountability, the draft Bill proposes to increase the maximum possible term of non-executive directors of the Bank's Court to four years to ensure greater continuity, and to enable the Chancellor to extend the terms of MPC and FPC members by six months.

Systemically important infrastructure

  • Responsibility for regulating settlement systems and recognised clearing houses (RCHs) will be transferred to the Bank of England (alongside its existing responsibility for payment systems). The FCA will retain responsibility for regulating recognised investment exchanges (RIEs).
  • The draft Bill proposes new measures in relation to both RCHs and RIEs, including:
    • simplifying the procedures for making directions and revoking recognition to enable quick responses to threats to financial stability;
    • financial penalties and censures for breaches of regulatory requirements;
    • rule-making powers;
    • a new power to order skilled persons reports and to appoint investigators (the latter currently only exercisable against RIEs); and
    • the removal of the special competition regime in Part 18 FSMA.
  • Further substantive issues will be deal with once the European regulation for the regulation of derivative transactions, central counterparties and trade repositories (EMIR) has been finalised.
  • The draft Bill will also make the changes initially proposed in relation to the regulation of settlement systems, including enabling HM Treasury to empower the Bank to issue codes of practice or make rules on specified matters.
  • The appropriate regulatory framework for CREST remains unresolved at this stage
  • The draft Bill will enable the Bank to apply for a court order to prevent or remedy compliance failures within payments systems.
  • HM Treasury will be able to order an inquiry into possible regulatory failures in the context of the Bank's regulation of systemically important infrastructure.  

Coordination of crisis management

  • The draft Bill sets out the legislative mechanism for coordination – in addition to prescribing communications between the Chancellor and the Governor, the Bank and HM Treasury must agree a MoU on coordination and management of crises. A draft MoU will be published during the period of pre-legislative scrutiny.
  • There remains some potential for conflict of interest between the PRA in its role as prudential supervisor of regulated firms, and the Bank in the operation of the Special Resolution Regime.
  • The draft Bill proposes a number of changes to the Special Resolution Regime, not all of which are minor and technical, as suggested, but which are largely uncontroversial. Particularly welcome is the removal of an area of legal uncertainty through specifying that a property transfer instrument or order may modify the terms of the trust only to the extent necessary and expedient to ensure that the transfer is effective.  

PRA supervisory approach

The PRA's objective

There are some significant changes to the PRA's objectives:  

  • Taking into account the views of the insurance sector, the Government has recognised that the distinct nature of insurance business should be recognised in the regulatory framework. The draft legislation now makes explicit reference to the responsibilities of the PRA with respect to insurers in the creation of a separate insurance objective: "contributing to the securing of an appropriate degree of protection for those who are or may become policyholders". When the PRA discharges its functions in relation to insurers and reinsurers, it must act compatibly with both the general objective (that is, promoting the safety and soundness of individual firms in a financial stability context) and the insurance objective, and act in a way which the PRA considers most appropriate for advancing both objectives.
  • The PRA will be required to give guidance on two matters:
    • how the PRA intends to advance its objectives in relation to different categories of PRA-authorised persons or PRA-regulated activity. For example, the PRA must give guidance as to how it proposes to regulate PRA-authorised persons who accept deposits differently from those who effect or carry on contracts of insurance.
    • matters which it regards as primarily its responsibility, rather than that of the FCA. This guidance, together with guidance issued by the FCA, should make the division of responsibilities between the PRA and the FCA more transparent, and this reflects what has been described as the PRA's role as 'prudential thought leader'. The PRA must consult the FCA before issuing such guidance.
  • A new section has been included to make clear that the new regime will not be operated on a "zero-failure" basis.
  • A new provision provides that, where a rule proposed by the FCA or PRA is to apply both to mutual societies and other authorised persons, the regulator must publish with the draft rule a statement saying whether the rule will affect mutual societies significantly differently from other authorised persons and details of the difference.


  • The draft legislation provides that the PRA has sole responsibility for securing an appropriate degree of protection for the reasonable expectations of policyholders as to their returns under with-profits policies. The PRA will be required to consult the FCA, and the FCA will need to provide advice, on matters relevant to achieving an appropriate balance between the interests of policyholders and the prudential position of the firm. The Government is considering whether current provisions are sufficient or whether further explicit legislative provisions are required.
  • Generally, HM Treasury will specify in secondary legislation the activities which are "PRA-regulated activities" for the purposes of FSMA. The order will determine the scope of regulation by the PRA and the persons whom the PRA will regulate.
  • The Government has decided not to define in the draft legislation the scope of PRA supervision of investment firms. It will proceed with the proposal that the PRA should have powers to develop its own designation criteria to determine which firms will be within its remit, subject to procedural safeguards.  


  • The arrangements regarding Lloyd's have not changed since the proposals in the previous consultation:
    • The Society of Lloyd’s and Lloyd’s managing agents will be dual-regulated firms; and
    • Lloyd’s members’ agents and Lloyd’s brokers will be FCA-regulated firms.  

Governance and accountability

  • Provisions on governance and other arrangements relating to the establishment of the PRA remain consistent with the proposals set out in the previous consultation.
  • The Bank of England will handle external complaints in relation to the PRA. The scheme will not cover regulatory judgements of the PRA and will relate solely to operational matters.
  • The Government has confirmed that the National Audit Office will be able to initiate value for money studies of the PRA.  


  • The draft legislation largely replicates the existing FSMA consultation requirements for rules and makes no exception for rules originating from Europe even where there may be little or no discretion as to implementation. The Government considers that it is important for the PRA and FCA to conduct their own assessment of the costs and benefits of proposed rules, as well as to keep track of the impact of regulation on UK firms.
  • The draft legislation requires the PRA to prepare an "analysis" of costs and benefits of proposed rules as opposed to an "estimate" as currently provided for in FSMA. The PRA should strive to provide estimates where it is proportionate to do so.
  • The PRA may choose how it meets its statutory duty to put in place arrangements for engaging with practitioners, so long as those arrangements are transparent.
  • Unlike the FCA, the PRA will not be required to maintain a Consumer Panel.

FCA approach

Objectives and general approach

  • The Government is proceeding with its previous proposals for the FCA to have a strategic objective to protect and enhance confidence in the UK financial system, and with operational objectives to protect consumers, market integrity and to promote efficiency and choice. The FCA will be required to discharge its functions in a way which promotes competition.
  • The White Paper confirms the need for a more proactive approach to conduct regulation with a clear focus on consumer outcomes. It also specifically endorses the progress made recently by the FSA in adopting a more pre-emptive and intrusive approach to conduct regulation.  

Product intervention powers

  • The White Paper notes general support for the FCA's new product intervention power enabling the FCA to intervene quickly and decisively when it considers that a product or product feature is likely to result in significant consumer detriment.
  • The FCA will have a considerable degree of discretion when determining whether to invoke its powers to ban, or temporarily impose requirements on products. The trigger will be when it appears to the FCA to be "necessary or expedient" for the purposes of advancing its consumer protection or competition objective. The legislation expressly states that the power cannot be used to advance its market integrity objective (unless permitted by an Order of HM Treasury), in response to concerns that the power is unlikely to be appropriate to the protection of professional or wholesale customers.
  • Somewhat controversially, the FCA will be able to make temporary product intervention rules, valid for up to 12 months, without prior cost-benefit analysis or consultation.
  • The draft Bill contains some, albeit limited, safeguards on the FCA's use of these powers. Namely it will be:
    • required to consult on and publish a statement of policy governing the circumstances in which it may make temporary product intervention rules;
    • prohibited from making further temporary rules which are substantially the same as temporary rules which have lapsed within one year; and
    • required to consult and issue a cost-benefit-analysis if it wishes to extend the temporary product intervention rules beyond 12 months.
  • Much will depend on how the circumstances for the exercise of this power are defined. No detail is provided as to which products or features will be targeted, but is expected to be laid out in FCA rules.
  • The Government's expectation is that this "powerful and necessary" tool will only be used where it is appropriate and proportionate and where it will provide clarity to consumers and firms.  

Financial promotions power

  • The draft Bill confirms new powers for the FCA to direct a firm to withdraw or refrain from issuing misleading financial promotions with immediate effect, so as to prevent consumers from being misled. The draft legislation imposes a duty on the FCA to publish directions made under this new power in order to increase the visibility of its activities and to clarify good and bad practice.
  • The draft legislation contains some safeguards that are intended to mitigate the risk of reputational damage to firms, namely the FCA will:
    • be required to warn a firm to its proposed direction action, and to consider representations before publishing any details of its action; and
    • have discretion as to the contents of the direction (although it will have a duty to publish the direction). For example, it may include a summary of the firm’s representations where it disputes the direction.  

Competition powers

  • The FCA will have a "wide competition mandate" so as to enable it to take "significant action in pursuit of competition", such as the promotion of current account switching. Details as to how the FCA will execute this mandate are not yet known, but will be set out in the paper on the FCA's approach, to be published shortly.
  • The draft Bill contains a new power for the FCA to refer to the OFT possible competition issues (eg, structural features in a market or potential collusive business practices) which may require technical competition expertise or resolution by the competition authorities. The OFT will then be obliged to respond within 90 days.
  • The FCA will not be given general competition law powers, as mooted previously.  

Wholesale and markets regulation

  • The FCA's listing functions will be brought into the general legislative framework of the FCA. This means that the FCA's strategic and operational objectives will apply to the discharge of its listing functions, even though listed companies are not authorised persons.
  • The Government is proceeding with its proposals to give extended powers to the FCA to:
    • Require a listed issuer to commission a skilled person's report (notwithstanding acknowledged objections). This power will also apply to sponsors, which had not previously been proposed. This recent addition perhaps reflects current concerns regarding sponsor responsibility.
    • Sanction sponsors by imposing unlimited penalties and/or suspensions or restrictions on sponsor activity (up to a period of 12 months).
    • Extend the limitation period for taking action for breaches of the Part 6 rules, which include the listing rules, from two years to three years.
    • Give the UKLA the power to make rules for, and impose sanctions on, primary information providers, such as regulatory information services.
    • Allow the UKLA to discontinue or suspend a listing at the request of an issuer without following the warning notice and decision notice procedure.


  • The existing regime for the regulation of RIEs will be retained. The FCA will be given a number of additional powers, as described under the "systemically important infrastructure" section above.

Challenges to supervisory decisions

  • The Government had previously considered narrowing the grounds of referral to the Upper Tribunal, so that references of supervisory decisions of the PRA may only be heard on limited grounds (those which could be raised on a judicial review) instead of the "full merits" review currently provided for in relation to FSA supervisory decisions. The Government has now decided to leave the Upper Tribunal's scope of review of supervisory decisions unchanged.
  • The course of action available to the Tribunal will however be limited in the event it chooses not to uphold the regulator's decision. With the exception of disciplinary matters and those involving specific third party rights, the Tribunal will not be able to substitute its opinion for that of the regulator as to the regulatory action which should be taken. The Tribunal will instead be required to remit the decision back to the regulator with such directions as it considers appropriate in relation to a range of findings.
  • This will apply to supervisory decisions of both the PRA and FCA.

FCA and PRA investigation and enforcement powers

  • The White Paper confirms that the Government anticipates that enforcement action by the PRA will be relatively rare. This is notwithstanding the fact that the PRA will have the same powers as the FCA to impose penalties on authorised persons.
  • The draft legislation does not seek to make any fundamental amendments to the disciplinary and related powers as presently contained in FSMA.  

Timeframe for representations

  • The Government considers that the 28 day time period within which the FSA must consider representations before issuing warning notices is too long and results in the enforcement process being unnecessarily slowed down. Therefore, a shorter period of 14 days has been proposed, although this can be extended by the regulator if it considers it appropriate. The time for making representations is thus being reduced even though investigations are typically lengthening (and as longer periods for the bringing of enforcement action have been, and are being, sought as part of the reform package).  

Investigation powers

  • The draft legislation provides the PRA and FCA with equivalent investigation powers to those presently held by the FSA.
  • In addition, the draft legislation provides that:
    • where a regulator or investigator has obtained documents under information gathering powers, they can retain those originals as long as necessary for the purposes for which they were requested or until any legal proceedings have been concluded;
    • the provisions relating to the execution of search warrants and the powers exercisable by those accompanying the constable in the execution of a warrant, will be put on a statutory footing in a uniform way across the UK; and
    • original documents seized under a search warrant can be retained as long as necessary, but the owner will have a power to apply to the court to seek their return.  

Publication of warning notices

  • The Government has remained committed to giving the FCA and PRA a controversial power (although not a duty) to publish the fact that a warning notice has been issued, and a summary of the notice. This is notwithstanding acknowledged concerns regarding reputational damage and the potential for consumer confidence to be undermined.
  • A number of new, albeit nebulous, safeguards are contained in the draft Bill, namely that the regulators may not publish a warning notice if it would be:
    • unfair to the person to whom the warning notice relates;
    • prejudicial to consumer interests; or
    • detrimental to the stability of the financial system.

Further, the regulators will now be required to consult the person to whom the warning notice relates before making the publication. The assurance given in the previous consultation that a notice of discontinuance will be issued in the event the regulator does not proceed with the enforcement action, has been taken forward.  

  • Given that the FCA will be conducting most enforcement activity, this tool will be used primarily by the FCA.

Coordination and regulatory processes

  • Effective coordination between the domestic regulatory authorities is clearly vital to the success of the new regime, and the Government has engaged in extensive consultation on these processes. In consequence, the draft Bill contains some detailed provisions relating to all core regulatory processes. This should facilitate stakeholder input at the pre-legislative scrutiny stage.

Operational delivery of effective coordination

  • The Government believes it would be unnecessarily inflexible and prescriptive for the legislation to make provision in respect of operational arrangements for the PRA and the FCA. The draft bill does not prevent the sharing of services (the Government concedes there may be scope for this for some processes). However, the PRA and FCA will be accountable for delivering their own objectives, and developing their own culture and approach to engagement with firms, so must themselves put the appropriate systems in place.
  • A document setting out how the FSA and the Bank plan to deliver their operational coordination will be published later this year.  

General coordination mechanisms

  • The duty to coordinate now includes a specific reference to the need to use the resources of each regulator in the most efficient and economic way, and a principle that any burdens or restrictions on persons or activities should be proportionate to the benefits.
  • The draft Bill contains an indicative list of issues to be covered in the MoU which the FCA and PRA must agree and publish – a draft MoU is to be available when the Bill is introduced to Parliament
  • Dual-regulated firms will be able to make representations about the effectiveness of coordination at the FCA's AGM and as part of the PRA's annual review process – the draft Bill also requires the PRA and FCA to give an account of how they have coordinated in their annual reports.
  • The PRA will be able to veto proposed FCA action if the PRA believes that action poses a risk to financial stability as a whole (the FPC is likely to be consulted) or that the action would result in sudden and disorderly failure that could destabilise the financial system as a whole.
  • The PRA will not be able to veto action which the FCA is required to take (whether by UK law or by EU or international law).  

Specific regulatory processes

  • Authorisation: In line with the preference apparently expressed by the majority of respondents, the authority responsible for the prudential regulation of the applicant will manage the authorisation process and ultimately grant permission.
    • In the case of dual-regulated firms, the PRA must gain the FCA's consent, and the FCA will be fully involved in the authorisation process and may gather information/ask questions of the applicants.
    • The FCA will primarily monitor arrangements for exempting appointed representatives from the need for authorisation which will be carried forward.
    • The FCA will take over the FSA's powers in respect of the provision of financial services by members of the professions.
  • Variation and removal of permission: Each of the authorities will have the equivalent of the FSA's existing powers to vary permissions on their initiative, and to decide on applications for voluntary variations of permissions (subject to the PRA's veto in respect of dual-regulated firms).
    • The FCA and PRA will be required to consult before they exercise their own initiative variation of permission powers.
    • The regulators will be required to determine applications for approval by persons also applying for Part 4A permission within the same timetable as the authorisation process.
  • Approved persons: In response to concerns about the importance of the role of SIFs in relation to conduct issues, the Government proposes a new approach:
    • The PRA will have the prime responsibility for designating SIFs, but the FCA will be able to do so where the PRA has not.
    • The FCA will be able to make and enforce its own codes on all approved persons and will be able to withdraw approval for egregious conduct or consumer protection reaches.
    • The authorities must consult to avoid overlap or duplication in their codes.
  • Passporting: The relevant prudential authority will issue notices for outward passporting firms. For inward passporting firms (this will only appear in secondary legislation):
    • The PRA will receive notices from overseas regulators under the Banking Consolidation Directive, the Consolidated Life Assurance Directive and the First, Second and Third Non-Life Insurance Directives, to enable it to have oversight of large firms branching into the UK.
    • Notification under all other Directives will go to the FCA.
  • Mutuals: The regulators will have to include within cost-benefit-analyses an analysis of the impact of rules on mutually-owned institutions. Responsibility for registration of Industrial and Provident Societies will sit outside the financial regulatory system.
  • Building societies: Under the draft Bill, building societies will be able to grant floating charges in favour of payment/settlement systems. The regulator will also be able to direct a transfer of building society business to a wider range of mutually owned institutions without a full member vote where expedient to protect the investments of shareholders or depositors.
  • Rule making and rule waivers: The regulators will be required to consult before making rules, to avoid potential conflicts and to avoid impairing each other's ability to achieve its objectives – they will each decide how best to deliver their objectives and duties. There will accordingly be no 'joint rule book'.
  • Supervision of financial groups: Efficient and effective group supervision will primarily be achieved through regulatory cooperation and coordination, but where 'solo' prudential supervision of firms within the same group is split between the FCA and the PRA, then in exceptional circumstances the authority responsible for consolidated supervision will be able to direct the other authority.
  • Unregulated holding companies: The power to issue directions will not be a 'day-to-day' regulatory tool and is to be used where the regulator considers (in pursuance of its objectives) that the activity of the parent undertaking is having a materially adverse effect on the regulation of authorised persons, and only where tools available at the level of the authorised person will not be effective. Examples given are where it would be appropriate for the parent to provide additional capital or liquidity, or to require an unregulated group company to provide a shared service to the regulated entity. HM Treasury will specify the kind of financial institutions in relation to which the power can be exercised.
  • Change of control: The relevant prudential regulator will be responsible for considering change of control applications in consultation.
  • Part VII: The PRA will be primarily responsible for the prudential process, in consultation with the FCA. Both will be able to apply for an independent actuary's report.  


  • The White Paper confirms that the FOS should be placed under a duty to share relevant information with the FCA, which the FCA will be required to consider in fulfilling its consumer protection objectives.
  • The Government recognises that the focus of the FOS should be on dealing with individual complaints on a case-by-case basis rather than on taking the lead in respect of mass consumer detriment issues.
  • The Government is considering placing a statutory role on FOS and other parties such as consumer groups, to refer particular issues to the FCA. The FCA would then, within a specified time period, be required to state publicly whether that issue was causing a mass detriment and why it considered that to be the case. The FCA would also be required to set out what action it would propose to take in order to address the issue. In the case of FOS, the FCA would be required to discuss and agree with them the process for handling individual complaints within this period.
  • The Government is seeking views on these proposals before detailing them in draft legislation.  

Investigations and reports into regulatory failures

  • Both the PRA and FCA will be required to investigate and report to HM Treasury on any regulatory failures of financial institutions.
  • The PRA will be under a duty to do so where the following might not have occurred but for regulatory failure:
    • public funds have been provided to or in respect of certain persons; or
    • serious damage has been caused to the values underpinning the PRA’s objectives.
  • The FCA's duty will be triggered where it believes:
    • there has been an adverse impact on any of its objectives; and
    • that regulatory failure has been a possible contributing factor.
  • The PRA and FCA will be responsible for determining whether such investigations and reports are necessary. However, HM Treasury may also direct the regulators to take this course of action where it believes the triggers have been met, or it is in the public interest.

Scrutiny of financial services regulation by competition authorities

  • A regime for scrutiny of the regulation of financial services by the competition authorities will be retained, and will apply to the FCA and PRA.
  • A two-tier model has been proposed, which would involve:  
  1. The OFT giving advice to the FCA and PRA on competition issues in the financial services market, with no statutory obligation for the regulators to respond. This is expected to suffice in most circumstances.
  2. Where an issue is identified by the OFT as preventing, restricting or distorting competition, it will be able to make a recommendation to which the regulators will be obliged to respond, but not comply with. The OFT will have a statutory information gathering power, with HM Treasury being able to issue a direction as an "absolute last resort".  

The model will also apply to advice given to the regulators by the Competition Commission as part of a report made in response to a market investigation reference.  

International aspects

  • The Government recognises that European and international reform will be equally significant to the changes taking place in the UK and has engaged with European and international partners on the global strengthening of the regulatory regime.
  • Responses to the previous consultation were supportive of the Government's emphasis on the need for the UK to have a single, coherent and consistent strategy to deliver sound reform which complements changes proposed to the UK framework.
  • The Government has stressed that whilst it has had some successes, such as in its negotiations on the Alternative Investment Fund Managers Directive, a number of challenges remain, especially concerning the new European capital requirements legislation.
  • There is to be a statutory MoU between HM Treasury, the Bank of England, the PRA and the FCA to coordinate the UK's approach to international coordination. The MoU on membership of, or relations with, international organisations, is at clause 44 of the draft Bill.

Click here for the consultation questions

Click here for a diagram of the regulatory structure

Click here for our response to HM Treasury's February consultation paper

Next steps  


  • Paper setting out PRA approach to supervision of insurers to be published (20 June)
  • Paper setting out FCA's regulatory philosophy to be published (expected shortly)
  • Consolidated version of the amended Financial Services and Markets Act 2000 to be published (expected as soon as possible)
  • Pre-legislative scrutiny to take place (week commencing 27 June until November 2011)
  • FPC to publish first Financial Stability Report (24 June)
  • Paper detailing coordination of PRA and FCA to be published


  • Deadline to respond to White Paper consultation questions (8 September)

Later in 2011

  • Bank of England and FSA document on operational coordination to be published
  • Government's response to consultation on transfer of responsibility for consumer credit regulation from OFT to FCA to be published

Before end 2011

  • Bill to be presented to Parliament

End Q1 2012

  • Bill committee stage

By end 2012

  • Bill to receive Royal assent

By early 2013

  • Full implementation of new regulatory architecture