ABI CH4

current financial services regulatory system

• Financial Services and Markets Act 2000 (FSMA)

• Financial Services Act 2012

• Bank of England and Financial Services Act 2016.

regulated activities

dealing in, arranging, managing or giving advice on any of the listed activities

financial policy committee

• within BofE,

• watches for emerging risks and strategic direction

prudential regulation authority

• within BofE

• stability and resolvability of systemically important firms

• outcomes-based approach

finnancial conduct authority

• conduct of business and market issues for all firms

• pru regulation of smaller firms

• thematic reviews, market-widde analysis

• reviews product lifecycle

bank of england and financial services act 2016

• put BofE at heart of financial stability

• when PRA joined established prudential regulation committee

uk financial authorities

• hm treasury

• bank of england (inc PRA and FPC)

• financial conduct authority

does treasury have operational responsibility for FCA or BofE

no

treasury concerned with

• economic disruption

• cost, risk and benefit of financial support ops (inc giving money)

• whether laws/structures are appropriate

• links with wider gov policy

bank of england committed to

promoting and maintaining a stable/efficient monetary and financial framework - healthy economy

responsibilities of the BofE

• settle payments

• function uk markets

• regulate uk banks/large firms

• provide routine/emergent liquidity to bank system

core purposes of BofE

• monetary stability - stable prices and confidence in the currency

• financial stability - detecting and reducing threats, can be lender of last resort

financial policy committee objectives

• primary - identify, monitor and remove/reduce systemic risks

• secondary - support economic policy of gov

• also publishes record of formal policy meetings and bi-annual financial stability report

financial policy committee consists of representatives from

• treasury

• BofE

• PRA

• FCA

PRA objectives

• primary - promote safety and soundness of firms and protect policyholders

• secondary - facilitate effective competition

• forward looking judgements

PRA working with FCA is

dual regulation (twin peaks regulatory structure)

prudential regulation committee consists of

• gov of BofE

• deputy gov for pru regulation

• deputy gov for financial stability

• deputy gov for markets and banking

• one member appointed by gov

• CEO of FCA

• 6 external members appointed by CofE

FCA responsible for