The Financial Services and Markets Bill: A legal perspective
| Published date | 01 April 1998 |
| DOI | https://doi.org/10.1108/eb024989 |
| Pages | 379-383 |
| Date | 01 April 1998 |
| Author | Jonathan Middleburgh |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 6 Number 4
The Financial Services and Markets
Bill:
A
legal perspective
Jonathan Middleburgh
Received: 24th September, 1998
11 Stone Buildings, Ground Floor Chambers, Lincoln's Inn, London WC2A 3TG; tel: 0171 831 6381;
fax: 0171 831 2575
Jonathan Middleburgh is a barrister spe-
cialising in general commercial law and
financial regulation. He was formerly a
lecturer at the University of Chicago and
has worked in both the Australian and
New Zealand jurisdictions.
ABSTRACT
The Financial Services and Markets Bill is an
impressive attempt to revisit the field of finan-
cial regulation and to replace the existing regu-
latory structure with a single regulator with
coherent powers. There is a danger, from the
legal perspective, that the Dill is too widely
drawn, vesting the new single regulator with
too wide a discretion to formulate rules and
policies which themselves will not be
susceptible
to legislative scrutiny.
INTRODUCTION
Writing in the financial press shortly after
the publication of the Financial Services
and Markets Bill, Howard Davies, Chair-
man of the Financial Services Authority,
described the Financial Services and Mar-
kets Bill as a 'large ostrich-sized egg'.1 He
went on to comment that 'in spite of its
impressive weight, the Bill leaves much
unsaid. It is deliberately a framework bill,
which gives considerable discretion to the
Financial Services Authority (FSA or
Authority) to set principles, make rules and
issue guidance. Many market participants
will, I think, welcome the flexibility this
gives,
as a matter of principle'.
It is impossible in a paper of this length
to do more than skate the surface of the
Bill which amounts to an attempt compre-
hensively to revisit the entire area of finan-
cial services regulation. From a legal
perspective, its most notable feature is the
open-textured language of the legislation
and the broad delegation of rule-making
power to the new single regulator, the
FSA. Inevitably, there is a tension between
a reluctance to impose too rigid a frame-
work upon the rule-making authority (the
FSA) and a danger of delegating rule-
making powers which are simply so wide
that they amount to an abrogation of legis-
lative responsibility. The Bill straddles the
boundary between those two extremes,
often falling the wrong side of the line.
THE FSA'S DUTIES
One obtains a flavour of the breadth and
texture of the Bill's language from the
definition of the FSA's duties in Clause 2
of the Bill. Clause 2 provides that in dis-
charging its general functions (which
themselves are only loosely defined),2 the
FSA must, so far as is reasonably possible,
act in a way which is compatible with the
regulatory objectives and which the FSA
considers most appropriate for the purpose
of meeting those objectives. The regulatory
Journal of Financial Regulation
and Compliance, Vol. 6, No. 4.
1998.
pp. 379-383
© Henry Stewart Publications,
1358-1988
Page 379
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