The Financial Services Authority's new approach to regulation
| Date | 01 March 2001 |
| Published date | 01 March 2001 |
| DOI | https://doi.org/10.1108/eb025079 |
| Pages | 245-252 |
| Author | David Capps,Sam Linsley |
| Subject Matter | Accounting & finance |
The Financial Services Authority's new
approach to regulation
David Capps and Sam Linsley
Received: 3rd May, 2001
DLA, 3
Noble
Street,
London
EC2V
7EE; tel: + 44 (0)20
7796
6850; e-mail:
samantha.linsley@dla.com
Journal
of
Financial Regulation
and
Compliance
Volume
9
Number
3
David Capps is a partner and Head of the
Financial Regulatory Group at DLA. He
specialises in contentious and non-conten-
tious financial services and regulatory-
based matters and acts extensively on
behalf of the regulators.
Sam Linsley is a Professional Support
Lawyer with DLA. She was called to the
Bar in 1988 and has over ten years' experi-
ence in the financial services industry,
both as a regulator and compliance officer
for IMRO, PIA and SFA regulated firms.
ABSTRACT
The new single
regulator
for financial services,
which acquires its main powers under the new
brings together nine regulatory and supervisory
bodies
operating under a broad range of existing
statutory or contractual arrangements across all
financial services
sectors.
In January 2000, the
Financial Services Authority (FSA) published
a
policy report on its new
approach
to regulation,
aimed at focusing its
regulatory
effort on the risks
to
its
statutory
objectives.
The
proposals
rely to a
significant extent upon a new risk assessment
process, outlined in the paper, which is intended
to identify those
areas
of greatest
risk.
The paper
considers
how the new approach is likely to be
implemented and looks at the issues involved in
applying a risk-based approach consistently
across
the industry
sectors.
The paper
includes
a
review of the supervisory arrangements adopted
by four of
the predecessor
regulators.
BACKGROUND
On 27th May, 1997 the Chancellor,
Gordon Brown, reported to the House of
Commons on the reform of the financial
regulatory system. This effectively marked
the end of the system of self-regulation
within a statutory framework established
under the Financial Services Act 1986 (FS
Act).
It was claimed that this regulatory
structure was 'not delivering the standard
of supervision and investor protection that
the industry and the public have a right to
expect'1 and that the division of responsi-
bility between the Securities & Investments
Board (SIB) and the self-regulating organi-
sations (SROs) was 'inefficient, confusing
for investors and lacks accountability and a
clear allocation of responsibilities'. The
Chancellor announced that the SIB would
be established as the single financial services
regulator with full responsibility and
accountability. New legislation would be
introduced to give this body the full range
of powers and discipline, established in sta-
tute,
which were currently available to the
SROs under contract law.
The transfer of regulatory and supervi-
sory responsibilities to the new single regu-
lator is not yet complete: the first stage was
the transfer of banking supervision to the
SIB (renamed the Financial Services
Authority in October 1997), which was
completed in June 1998 following enact-
ment of the Bank of England Act 1998.
The main legislative framework under
Journal of Financial Regulation
and Compliance, Vol. 9, No. 3,
2001.
pp. 245-252
© Henry Stewart Publications,
1358-1988
Page
245
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