In the UK, changes have been made to the regulation of financial services. These changes include separating the regulation of prudential and conduct operations which were previously regulated by the Financial Services Authority (FSA). Regulation will now be carried out by two new organisations, namely, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).
According to the FSA, firms that are ‘dual regulated’, such as banks, insurers and major investment firms, will be supervised by two independent groups for prudential and conduct. These groups will work to different objectives and act separately with firms, but will coordinate internally to share information and data.
All other firms will be supervised by one supervision area for both conduct and prudential issues.
The supervision models will be different for the PRA and FCA:
- prudential supervision will continue to have dedicated resources supervising firms; and
- conduct supervision will focus more on thematic work, and less on firm-specific work.