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Government announces new structure for UK financial services regulation
On 16 June 2010, HM Treasury published a speech delivered by George Osborne, Chancellor of the Exchequer, at the Mansion House, providing details of the government's proposals to reform the UK financial services regulatory structure. Further detail on these reforms was provided on 17 June 2010 in a statement to the House of Commons made by Mark Hoban, Financial Secretary to HM Treasury.
Mr Osborne announced the government's proposals to abolish the tripartite system which will result in the FSA ceasing to exist in its current form. In their place, the government intends to establish the following new bodies by the end of 2012:
Prudential Regulation Authority (PRA). The PRA will be a subsidiary of the Bank of England (BoE), responsible for the prudential regulation of financial firms including banks, investment banks, building societies and insurance companies. Hector Sants, FSA Chief Executive, will become both the PRA chief executive and a new BoE deputy governor. In February 2010, the FSA announced that Mr Sants would leave the FSA in summer 2010. He will now remain at the FSA to oversee the transition.
- Consumer Protection and Markets Authority (CPMA). The CPMA will regulate the conduct of financial firms providing services to consumers. It will be responsible for conduct of business for all firms, whether in the retail or wholesale sectors.
- Financial Policy Committee (FPC). The FPC will be a committee of the BoE, responsible for considering macro issues affecting economic and financial stability and for taking action in response. The government will establish an interim FPC in autumn 2010 in advance of any legislation. The BoE Governor will chair the FPC and its members will include the PRA chief executive and the CPMA chairperson.
- Serious economic crime agency. This body will tackle serious economic crime, taking on functions currently fulfilled by a number of government departments and agencies.
The government will publish a consultation document on its proposals before parliament's summer recess.
