Part IV Regulatory and Other Developments in the UK 2010‒2016, 13 Financial Services Act 2012: Changes to the Regulatory Architecture

2018 ◽  
Author(s):  
Mccormick Roger ◽  
Stears Chris
Keyword(s):  
Financial Services ◽  
New Product ◽  
Regulatory Structure ◽  
Regulatory Architecture ◽  
Bank Of England ◽  
Regulatory Approach ◽  
Significant Change ◽  
The Uk ◽  
Business Requirements ◽  
Individual Accountability

This chapter charts the passage of the Financial Services Act 2012 (FS Act 2012), from its policy conception through its consultation phase, and to its enactment. The FS Act 2012 received royal assent on 19 December 2012 and came into effect from 1 April 2013. The Act comprised 10 parts and 21 schedules and formally amended the Bank of England Act 1998, the Financial Services and Markets Act 2000, and the Banking Act 2009, to give effect to the reforms. The enactment of the FS Act 2012 represented a significant change in not only the regulatory structure, but the regulatory approach to supervision and enforcement. The new mantra was far a more holistic and intrusive form of regulation. Whether viewed from the perspective of the prudential thresholds, conduct of business requirements and new product intervention powers, or in light of the enhanced investigatory and enforcement priorities and a focus on individual accountability, the reforms were significant.

Part I Regulatory Structure, 2 Statutory Framework for UK Financial Services Regulation

2018 ◽  
Author(s):  
Walker George ◽  
Purves Robert ◽  
Blair Michael
Keyword(s):  
Financial Services ◽  
Regulatory Structure ◽  
Prudential Regulation ◽  
Financial Services Regulation ◽  
Bank Of England ◽  
Break Up ◽  
The Uk ◽  
Regulatory Reforms

This chapter examines the statutory framework for financial services regulation in the UK. The regulatory reforms that culminated in the break-up of the Financial Services Authority (FSA) and the return of regulatory responsibilities to the Bank of England have complicated but in many ways reinforced the original vision of a consolidated statutory framework for all financial services regulation under the Financial Services and Markets Act 2000 (FSMA). The FSMA is undoubtedly more complicated because of the need to accommodate collaboration between the Financial Conduct Authority (FCA) and the Bank of England acting as Prudential Regulation Authority (PRA). The chapter provides an overview of the structure and statutory framework of the FSMA as well as the functions of the FCA and the PRA. It also considers the scope of financial services regulation under the FSMA and the confidentiality of information obtained by the FCA and the PRA in the discharge of their functions.

Part I Regulatory Structure, 1 UK Financial Services Reform

2018 ◽  
Author(s):  
Walker George ◽  
Purves Robert ◽  
Blair Michael
Keyword(s):  
Financial Services ◽  
Integrated System ◽  
Financial Control ◽  
Regulatory Structure ◽  
Bank Of England ◽  
Control Set ◽  
Set Up ◽  
The Uk ◽  
And Function ◽  
Role And Function

This chapter examines the reform of financial services regulation in the UK. The objective of the UK's most recent regulatory reforms has been to strengthen the role and function of the Bank of England at the centre of the UK financial system. This was considered necessary, in particular, in light of the need to monitor and manage the financial markets as a whole. The chapter outlines the regulatory background to the establishment of the integrated system of financial control set up under the Financial Services and Markets Act 2000 and its amendment, in particular, under the Banking Act 2009, Financial Services Act 2010, and Financial Services Act 2012 (FSA 2012). It also considers the principal events surrounding the financial crisis in the UK and the immediate official response to it. Finally, it discusses the role and function of the Bank of England under the revised regulatory structure.

Legal and Conduct Risk in the Financial Markets

2018 ◽  
Author(s):  
McCormick Roger ◽  
Stears Chris
Keyword(s):  
Financial Markets ◽  
Financial Services ◽  
Financial Stability ◽  
Current Approach ◽  
Fiduciary Duty ◽  
Regulatory Change ◽  
Regulatory Structure ◽  
Legal Risk ◽  
The Uk ◽  
Libor Manipulation

This third edition on legal risk has been expanded to include much new material specifically on conduct risk. It has been updated to take into account developments in the law and professional standards concerning such risks and associated values in the context of the financial markets. Significant (and in some cases, endemic) conduct-related scandals, such as the widespread mis-selling of financial products and LIBOR manipulation, exposed by the financial crisis, have resulted in legal and regulatory change in equal measure (and profound effect) to that of the prudential and financial stability concerns captured in the second edition. Consequently this new edition fully examines the current approach to trust, ethics, and conduct within the broader framework of reputational and legal risk. In doing so, it clarifies what constitutes legal risk in contemporary financial markets and how to manage it, drawing on examples and case studies. Other developments in areas such as the resolution/insolvency of banks, the revision of the UK regulatory structure from the Financial Services Authority to the Financial Conduct Authority and Prudential Regulation Authority, and the recently made new crime of reckless management of a bank are all considered in full. There is also discussion of trends in areas ripe for development such as fiduciary duty amongst financial markets participants.

Part III Financial Sectors and Activities, 17 Insurance Regulation

2018 ◽  
Author(s):  
Walker George ◽  
Purves Robert ◽  
Blair Michael
Keyword(s):  
Financial Services ◽  
Third Parties ◽  
Regulatory Regime ◽  
Eu Law ◽  
Compensation Scheme ◽  
Insurance Regulation ◽  
Eu Legislation ◽  
Regulatory Approach ◽  
European Union Legislation ◽  
The Uk

This chapter examines the statutory regime for the regulation of insurers as well as intermediaries and brokers dealing with insurance products. It first provides an overview of terminology and categorisation of insurance under European Union legislation and UK regulation before discussing the evolution of the regulatory approach to insurers. It then considers EU law and UK law on insurance and reinsurance, along with the relevant provisions of the Financial Services and Markets Act 2000, Contracts (Rights of Third Parties) Act 1999, and other applicable legislation. It also analyses insurance regulation under the Financial Ombudsman Service and the Financial Services Compensation Scheme. Finally, it assesses the influence of EU legislation on the structure and much of the detail of the UK regulatory regime for insurance.

Part I Regulatory Structure, 3 European Financial Services

2018 ◽  
Author(s):  
Walker George ◽  
Purves Robert ◽  
Blair Michael
Keyword(s):  
Financial Services ◽  
Primary Sources ◽  
Banking Union ◽  
The European Union ◽  
Regulatory Structure ◽  
European Court ◽  
Treaty Of Rome ◽  
The Uk ◽  
Council Of Ministers ◽  
The Eu

This chapter examines the evolution of the European Union' financial services law and its impact on the development of financial services law in the UK, as it stands at the end of 2016, six months after the EU referendum. It first describes the evolving role and functions of the EU institutions, namely: the Council of Ministers, the European Commission, the European Court of Justice, and the European Parliament. It then considers the primary sources of EU law, including treaties, and the effects of the various changes in the Treaty of Rome. It also discusses the establishment of the single market in financial services and the moves to establish a banking union. Finally, it analyses the substantive financial services measures that have been adopted in the EU since the 1970s.

Part A Regulatory Matters, 8 The Market Regulators

2015 ◽  
Author(s):  
Proctor Charles
Keyword(s):  
Financial Services ◽  
Financial Stability ◽  
Credit Crunch ◽  
Market Regulation ◽  
European Level ◽  
Banking Market ◽  
Bank Of England ◽  
Regulatory Bodies ◽  
The Uk

This chapter explains the various authorities involved in UK banking market regulation. It first considers the role of the UK Financial Services Authority (FSA), including its statutory objectives and powers under the Financial Services and Markets Act 2000. It then discusses the role of the Bank of England in the fields of financial stability and monetary policy; the role of Her Majesty's Treasury; the development of regulatory bodies at the European level, largely in response to the credit crunch and the problems to which it gave rise; and some recent international initiatives.

Add-on goods, contingent services and product bundling

2016 ◽  
Vol 8 (2) ◽  
pp. 94-113
Author(s):  
John Kevin Ashton
Keyword(s):  
Financial Services ◽  
Regulatory Structure ◽  
Legal Intervention ◽  
Content Type ◽  
Legal Proceedings ◽  
Regulatory Processes ◽  
Behavioural Economic ◽  
Policy Agendas ◽  
The Uk ◽  
Regulatory Practice

Purpose The study examines influence of behavioural economic theories of add-on goods and contingent charges on the regulation of two touchstone markets in the UK. These markets, the payment protection insurance (PPI) market and the market for overdrafts can both be characterised as add-on goods, have displayed excessive levels of profitability and been the focus of continuing and substantial public mis-trust. Despite these similarities, the regulatory treatment of these two markets has been very different. The purpose of this paper is to explore the context of these cases and examine why these differences in regulatory reporting have developed. Design/methodology/approach The research questions are examined through a detailed review of the regulatory reporting in the UK PPI and overdraft market. This review of over 20 regulatory reports, numerous enforcement actions, associated legal proceedings and related international evidence is employed to determine commonalities and differences in the regulatory actions proposed, motives adopted and success of these regulatory processes. Findings It is reported the dynamic and fragmented regulatory structure, multiple policy agendas and a successful legal intervention have all influenced how these financial services markets have been regulated and behavioural economic concepts applied. In particular aspects of overdraft markets remain challenging to address as it is still possible to exclude competition within aftermarkets. The regulatory intervention into PPI markets by contrast addressed concerns raised by add-on good theory and amended the form of distribution underlying this market more directly and successfully. Originality/value There have been numerous excellent reviews of behavioural economics and finance published on a diversity of topics. Despite such a wide coverage, a relatively under-researched aspect of this literature remains the application of these relatively new theoretical insights within markets and how these have influenced regulatory practice. This review of regulatory reporting addresses this gap in the literature through considering two of the most problematic financial services markets of the last decade in the UK.

9 The UK Special Resolution Regime

2015 ◽  
Author(s):  
Kleftouri Nikoletta
Keyword(s):  
United Kingdom ◽  
Crisis Management ◽  
Financial Services ◽  
Bank Failure ◽  
Compensation Scheme ◽  
Management Framework ◽  
The United Kingdom ◽  
Bank Resolution ◽  
Bank Of England ◽  
The Uk

When designing a crisis management framework, a key decision for policymakers is whether to combine the deposit protection and bank resolution functions, or whether to create two separate bodies. This chapter sets out the United Kingdom’s approach to dealing with failing banks. In the United Kingdom, the deposit guarantee scheme, the Financial Services Compensation Scheme, is a separate institution from the resolution authority, the Bank of England, and the banks’ prudential supervisor, the Prudential Regulation Authority. The Banking Act 2009 provides for a framework within which the PRA, Bank of England, HM Treasury, and FSCS work closely with each other prior to and during a bank failure.

EU membership, financial services and stability

2016 ◽  
Vol 236 ◽  
pp. 31-38 ◽  
Author(s):  
Angus Armstrong
Keyword(s):  
Financial Services ◽  
Direct Access ◽  
Global Finance ◽  
Eu Membership ◽  
Legal Enforcement ◽  
Bank Of England ◽  
Financial Infrastructure ◽  
The Uk ◽  
Domestic Regulation ◽  
The Eu

This paper examines whether EU membership enhances or diminishes the UK's financial sector stability, and therefore its prominence in global finance. The UK is host to the largest share of financial services in the EU, despite being outside of the Eurozone. An important reason is that, as a member of the EU, the UK has direct access to the Eurozone's financial infrastructure. If the UK leaves the EU (and EEA) banks and other financial services firms may continue to have access to the Single Market, but they are unlikely to have direct access to the Eurozone's infrastructure. Banks in the UK will no longer be direct members the Eurozone's payments system. The swap arrangement between the European Central Bank and Bank of England would have no legal enforcement mechanism. Resolution of cross-border banks would be more challenging with less incentive for a cooperative outcome. While some may welcome the reduced size of the financial system, not without reason, this could be achieved more effectively with domestic regulation than by leaving the EU. Given the uncertainty that would follow a vote to leave, there is a risk of capital flight.

5. Bank Supervision in Practice: The Case of the UK and of the European Banking Union

2018 ◽  
Author(s):  
Ross Cranston ◽  
Emilios Avgouleas ◽  
Kristin van Zweiten ◽  
Theodor van Sante ◽  
Christoper Hare
Keyword(s):  
Financial Services ◽  
Financial Stability ◽  
Debt Crisis ◽  
Banking Union ◽  
Financial Policy ◽  
Regulatory Structure ◽  
Bank Supervision ◽  
European Banking Union ◽  
European Banking ◽  
The Uk

This chapter discusses banking supervision in practice. It focuses on two jurisdictions: the UK and the European Banking Union (EBU), and considers in particular the type of powers enjoyed by the UK and EBU regulators, and the way they exercise them in their supervisory approaches. In the process the chapter highlights loopholes in the respective regimes and to some extent evaluates their effectiveness. On 1 April 2013 the Financial Services Act 2012 came into force, removing the Financial Services Authority and delivering a new regulatory structure for the UK, which comprises the Prudential Regulation Authority responsible for microprudential regulation and supervision of banks, building societies, and investment firms; and the Financial Conduct Authority, in addition to a financial stability (macroprudential) body within the Bank of England, the Financial Policy Committee. The EBU brought about the centralization of bank supervision and resolution within the Eurozone. The trigger for the establishment of the EBU was the Eurozone debt crisis.

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