- FSA to Be Broken Up as Part of Substantial Regulatory Reform
- June 28, 2010 | Authors: Peter Anthony Bibby; Christopher Leonard; Helen Janet Marshall
- Law Firm: Bingham McCutchen (London) LLP - London Office
In his first Mansion House speech to the City of London on June 16, 2010, Chancellor George Osborne announced a series of substantial reforms to the UK regulatory system, indicating that the Financial Services Authority (FSA) will “cease to exist in its current form”.
The proposed new regulatory system will see the dismantling of the FSA and the creation of three new regulatory bodies: the Prudential Regulation Authority (PRA), a subsidiary of the Bank of England which will be responsible for the macro-prudential regulation of sectors including deposit-takers, insurers and investment banks; the Consumer Protection and Markets Agency (CPMA) which will take on the FSA’s responsibility for consumer protection and conduct regulation, regulating all firms, both retail and wholesale, including those regulated prudentially by the PRA; and a single agency to tackle serious economic crime. The government also intends to legislate to create a new Financial Policy Committee (FPC) in the Bank of England which will be responsible for maintaining financial stability. Hector Sants, the current CEO of the FSA, will remain at the FSA to oversee the transitions before becoming the CEO of the PRA, supported by Andrew Bailey from the Bank of England.
In a statement to the House of Commons on June 17, 2010, Financial Secretary Mark Hoban MP announced a timetable for the reforms. The government will begin by legislating to create the FPC. This will be followed by the creation of the PRA and, finally, the CPMA. An interim FPC will be established by Autumn 2010, in advance of legislation, and the passage of all necessary primary legislation will take place within two years. A “full and comprehensive” consultation process will begin immediately in relation to the PRA, CMPA and economic crime agency and the government has pledged to publish a detailed policy document for consultation before the summer recess.