Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

Major reforms in UK financial regulation: Draft Bill and White paper produced

By Becky Subscribe to RSS | March 15th 2012 | Views:
loading
 
  



The most significant modification in a decade to the UK’s financial regulatory architecture began to take shape on 16 June 2011 with the publication of the Government’s financial regulation White Paper. This provides some further detail on the Government’s proposed reforms to the UK financial regulatory regime and also contains a draft Bill to amend the existing banking and financial services legislation.

It is envisaged that a Bill will be introduced to Parliament before the end of 2011 in time for Royal Assent before the end of 2012 and the full implementation of the new architecture by early 2013.

At 413 pages long, the White Paper is a weighty milestone in a process which formally commenced with the (as he was then) new Chancellor of the Exchequer George Osborne’s Mansion House speech delivered 366 days earlier on 15 June 2010. The Government’s plans for reforming the regulatory system include:

• establishing a macro-prudential regulator, the Financial Policy Committee (FPC) within the Bank of England to monitor and respond to systemic risks;

• transferring responsibility for prudential regulation to a focused new regulator, the Prudential Regulation Authority (PRA) established as a subsidiary of the Bank of England; and

• creating a focused new conduct of business regulator – the Financial Conduct Authority (FCA) – “to ensure that business across financial services and markets is conducted in a way that advances the interests of all users and participants”.

The Conservatives had actually flagged a year prior to their election win an intended move away from the much maligned “tripartite” model of shared responsibility for financial services regulation between HMT Treasury, the Bank of England and the Financial Services Authority. By restoring the Bank of England to the central role of economic and financial stability, George Osborne is reversing Gordon Brown's 1997 changes to the way banks and other institutions are overseen.

Blueprint for reform

The White Paper provides a summary of the 350 written responses received to the February consultation and describes how this latest articulation of policy has been extensively informed by the previous consultation. Indeed, the White Paper does contain some new policy proposals as a result of stakeholder feedback which include:

• a specific statutory objective governing the PRA’s responsibilities for the insurance sector

• a proposed power for the FCA to order skilled persons reports in respect of sponsors as well as issuers

• an updated and enhanced competition regime under the FCA

• steps to strengthen the handling of cases of widespread consumer detriment, including misselling.

Notable features of the regime discussed in White Paper include:

• the FCA's new product intervention power enabling it to intervene quickly and decisively when it considers that a product or product feature is likely to result in significant consumer detriment

• new powers for the FCA to direct a firm to withdraw or refrain from issuing misleading financial promotions with immediate effect, so as to prevent consumers from being misled

• the Government’s decision to leave the Upper Tribunal's scope of review of supervisory decisions unchanged. However, the course of action available to the Tribunal will be limited in the event it chooses not to uphold the regulator's decision. Other than in limited situations, the Tribunal will not be able to substitute its opinion for that of the regulator as to the regulatory action to be taken. The Tribunal will instead be required to remit the decision back to the regulator with such directions as it considers appropriate in relation to a range of findings.

• the Government’s continued commitment to giving the FCA and PRA a controversial power to publish the fact that a warning notice has been issued, and a summary of the notice.

• in relation to Authorisation, the authority responsible for the prudential regulation of the applicant will manage the authorisation process and ultimately grant permission.

Next steps

While this current process of regulatory reform still has another 18 months to run, it looks likely to be concluded more quickly than the prior process (known as “N2”) which ran for a full parliamentary term from May 1997 to June 2001 (and slightly beyond).

Firms should keep abreast of the form and substance of the regime which will commence in 2013 as the detail emerges. However, by then many firms will have had to have responded to many of the other regulatory initiatives taking place such as the US’s Dodd-Frank, not to mention the EU’s lengthy agenda of reform.

Becky - About Author:
IMS was founded as a compliance consultancy focusing on the wholesale sector. Find out more information about FSA Authorisation.

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/finance-articles/major-reforms-in-uk-financial-regulation-draft-bill-and-white-paper-produced.htm

Related Finance Articles Subscribe to RSS

The Benefits of Financial Advice Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
You work hard for your money and you therefore need to ensure that you properly manage it so that yo...
 
The Benefits of Financial Advice Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
You work hard for your money and you therefore need to ensure that you properly manage it so that yo...
 
Pensions in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Pension is a money received after retirement or end of a work agreement. It is mostly associated wit...
 
Pensions in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Pension is a money received after retirement or end of a work agreement. It is mostly associated wit...
 
Pension in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Leeds has many financial advisors especially those dealing with pension. Pension is very important e...
 
Pension in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Leeds has many financial advisors especially those dealing with pension. Pension is very important e...