The Financial Services Bill was introduced into Parliament on 26 January 2012 and will reform the system which currently regulates the UK’s financial services industry. At present, responsibilities are divided between the Treasury, the Bank of England and the Financial Services Authority (‘FSA’). The new system will give the Bank of England macro-prudential responsibility for the oversight of the financial system together with responsibility for the day-to-day prudential supervision of financial services firms managing significant balance-sheet risk. A new conduct of business regulator will be created to protect consumers, promote competition and ensure integrity in markets. The FSA will cease to exist in its present form and will be replaced by two new regulators: the Prudential Regulation Authority and the Financial Conduct Authority. The legislation will:  

  • establish a macro-prudential authority within the Bank of England, the Financial Policy Committee, to monitor and deal with systemic risks;  
  • transfer responsibility for significant prudential regulation to a new regulator, the Prudential Regulation Authority. This body will be established as a subsidiary of the Bank of England; and  
  • create a new conduct of business regulator, the Financial Conduct Authority, which will also assume the functions of the UK Listing Authority.  

Subject to the Bill passing through Parliament, it is proposed that the new authorities will be established in early 2013. In the meantime, however, the FSA is planning to move as closely as possible to the new system as from 2 April this year.  

HM Treasury press release on the introduction of the Financial Services Bill to Parliament available at:  

http://www.hm-treasury.gov.uk/fin_financial_services_bill.htm

Text of speech by Hector Sants, Chief Executive, FSA: Delivering ‘twin peaks’ within the FSA: 06/02/2012 available at:

http://www.fsa.gov.uk/portal/site/fsa/menuitem.10673aa85f4624c78 853e132e11c01ca/?vgnextoid=903328e6c3f45310VgnVCM10000044b c10acRCRD&vgnextfmt=default