The future of financial regulation

 

Following the Government’s announcement of proposals to change the structure of the financial services regulatory system in the UK, HM Treasury (HMT) has issued a Consultation Paper to provide further information on the planned restructuring and to initiate the consultation process.

 

Responses to the consultation are to be provided to HMT by 18 October 2010. The planned changes will have a significant impact on the future of UK regulation and we encourage our clients to take the time to review HMT’s proposals and provide a response.

 

Key elements of the proposal are:

  • FSA to be disbanded and replaced by separate regulators for
    prudential and conduct issues
  • A new Bank of England committee, the Financial Policy Committee (FPC) to focus on financial stability and monitoring of systemic risk
  • Prudential regulation to become the responsibility of the Bank of England via the newly created Prudential Regulation Authority (PRA)
  • A conduct and markets regulator, the Consumer Protection and Markets Authority (CPMA) to be established and operate independently of the Bank of England
  • Increased focus on “judgement-based regulation”
  • The UKLA could merge with the Financial Reporting Council, with a view to creating a more powerful companies regulator
  • A new crisis management framework will be created seeking to define responsibilities more clearly in an emerging risk and/or crisis situation