Education, advice, and the Financial Services Authority's statutory objective

Publication Date01 Apr 2000
DOIhttps://doi.org/10.1108/eb025054
Pages333-343
AuthorPatrick Ring
SubjectAccounting & finance
Journal of Financial Regulation and Compliance Volume 8 Number 4
Education, advice, and the Financial
Services Authority's statutory objective
Patrick Ring
Received: 2nd August, 2000
Division of Risk, Britannia Building, Glasgow Caledonian University, City Campus, Cowcaddens
Road,
Glasgow G4
0BA;
tel: +44 (0)141 331
3151;
fax: +44 (0)141 331 3229;
e-mail p.ring@gcal.ac.uk
Patrick Ring is currently a lecturer in
financial services at the Division of
Risk,
Caledonian Business School, Glasgow
Caledonian University. He is a qualified
solicitor who has worked in the pensions
industry for a number of years.
ABSTRACT
For the first time, a UK financial services reg-
ulator will have a statutory duty to enhance
financial education in the UK. The Financial
Services Authority is now beginning to set out
in some detail how it will go about fulfilling
that duty, and the issues it faces. As well as
increasing consumer awareness of the financial
industry and improving consumers' ability to
identify their financial needs, the FSA aims to
enable consumers to decide upon the purchase
of financial products through the provision of
the FSA's own information and advice
what may be
referred
to as
a
form of 'solution
education'. This will place the FSA in a rela-
tionship with the general public where the
rights, responsibilities and expectations of, and
upon,
consumers must be made clear and
accepted. The inability of the current regula-
tory regime to establish unequivocally what
constitutes adequate or appropriate advice does
not augur well.
INTRODUCTION
If 'education, education, education' is the
mantra of Tony Blair and the Labour
Party, then it certainly appears to have
been followed by the Financial Services
Authority (FSA).
The FSA was given the task by Gordon
Brown, shortly after Labour's 1997 election
victory, to establish a system of financial
regulation overseen by a single regulator,
the FSA
itself.
This is to replace the func-
tion-oriented, multiple regulator regime
established under the Financial Services Act
1986.
The rationale for the change is set
out in the Consultation Paper for the
Financial Services and Markets Bill.
'The Government believes the current
system is costly, inefficient and confusing
for both regulated firms and their
customers. It is not delivering the
standard of supervision and investor
protection that the public has a right to
expect. We are therefore establishing a
single, statutory regulator for the UK
financial services industry, with clearly
defined regulatory objectives and a single
set of coherent functions and powers.'1
That Bill is now the Financial Services and
Markets Act 2000. One of the statutory
objectives to be placed upon the FSA in s.4
of the Act is to promote public under-
standing of the financial services system.
Given the high profile problems that have
arisen in the recent past with financial pro-
Journal of Financial Regulation
and Compliance, Vol. 8, No. 4,
2000,
pp. 333-343
© Henry Stewart Publications,
1358–1988
Page 333

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