AIMA

UK regulatory reform

In reaction to the shortcomings exposed by the financial crisis, the UK government has undertaken a significant reform of its financial services regulatory structure.

On 16 June 2011, a White Paper and a draft Financial Services Bill amending the Financial Services and Markets Act 2000 were published, providing details on the Government’s proposed reforms to the UK financial regulatory regime. This builds upon two previous consultations published by HM Treasury in July 2010 and February 2011.

The current tripartite system of financial regulation involving the FSA, Bank of England and the Treasury is considered to be flawed, as no single institution has the responsibility or tools to oversee the financial system as a whole. The White Paper, therefore, details a new structure to replace the current system and provides for the creation of three new regulatory bodies: the Financial Policy Committee (FPC), the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA).

The Bank of England will assume responsibility for overall macro-prudential regulation, assisted by the FPC which will monitor and respond to systemic risks. Responsibility for micro-prudential regulation will be transferred to the PRA, an independent subsidiary of the Bank of England. Finally, the fully independent FCA will be focused on conduct of business regulation across the whole financial services sector.

Consultation documents

The Financial Conduct Authority Approach to Regulation (June 2011)

HMT Consultations on the structure of UK financial regulation

AIMA documents

Response to FSA AND HMT - UK regulatory reform (August 2011)

Response to HMT consultation- A new approach to financial regulation: building a stronger system (April 2011)

Response to Independent Banking Commission Issue Paper - Call for Evidence  (November 2010)