Financial regulation is a broad set of policies that apply to the financial sector in most jurisdictions, justified by two main features of finance: systemic risk , which implies that the failure of financial firms involves public interest considerations; and information asymmetry , which justifies curbs on freedom of contract in selected areas of financial services, particularly those that involve retail clients and/or Principal–agent problems . An integral part of financial regulation is the supervision of designated financial firms and markets by specialized authorities such as securities commissions and bank supervisors .
24-676: The Financial Conduct Authority ( FCA ) is a financial regulatory body in the United Kingdom . It operates independently of the UK Government and is financed by charging fees to members of the financial services industry. The FCA regulates financial firms providing services to consumers and maintains the integrity of the financial markets in the United Kingdom. It focuses on the regulation of conduct by both retail and wholesale financial services firms. Like its predecessor
48-542: A "disorderly market" through its actions. Financial regulation In some jurisdictions, certain aspects of financial supervision are delegated to self-regulatory organizations . Financial regulation forms one of three legal categories which constitutes the content of financial law , the other two being market practices and case law . In the early modern period , the Dutch were the pioneers in financial regulation. The first recorded ban (regulation) on short selling
72-607: A business must offer a broad range of retail investment products and give consumers unbiased and unrestricted advice based on comprehensive and fair market analysis . In February 2011, it was confirmed that the new head of the FCA would be Martin Wheatley , formerly chairman of Hong Kong's Securities and Futures Commission . However, Wheatley's appointment was not put in front of the Treasury Select Committee for
96-711: A new regulatory structure consisting of the Bank of England's Financial Policy Committee, the Prudential Regulation Authority and the Financial Conduct Authority. With effect from 14 September 2019, the FCA introduced strong customer authentication rules as required by the Revised Directive on Payment Services (PSD2), aiming to reduce fraud and improve security by requiring payment services providers to use two of
120-497: A pre-appointment hearing. Instead, the Government stated it would put Wheatley and future chief executives forward for a pre-commencement hearing, i.e. after they had been formally appointed but before they began the role. In July 2015, Wheatley resigned his post at the FCA following a vote of no confidence by George Osborne . In September 2015, Tracey McDermott took over from Wheatley as acting chief executive. Andrew Bailey
144-568: A proper manner. Most prominent the pricing process, execution and settlement of trades, direct and efficient trade monitoring. Financial regulators ensure that listed companies and market participants comply with various regulations under the trading acts. The trading acts demands that listed companies publish regular financial reports, ad hoc notifications or directors' dealings. Whereas market participants are required to publish major shareholder notifications. The objective of monitoring compliance by listed companies with their disclosure requirements
168-754: A refund under the Contingent Reimbursement Model Scheme, a voluntary scheme overseen by the Payment Systems Regulator that provides protections for customers of signatory firms, subject to a number of exclusions. The Office for Professional Body Anti-Money Laundering Supervision ( OPBAS ) is based within the FCA. It was established in January 2018 to oversee the 22 accountancy and legal professional bodies which supervise anti- money laundering compliance in view of
192-484: Is to ensure that investors have access to essential and adequate information for making an informed assessment of listed companies and their securities. Asset management supervision or investment acts ensures the frictionless operation of those vehicles. Banking acts lay down rules for banks which they have to observe when they are being established and when they are carrying on their business. These rules are designed to prevent unwelcome developments that might disrupt
216-529: The FSA , the FCA is structured as a company limited by guarantee . The FCA works alongside the Prudential Regulation Authority and the Financial Policy Committee to set regulatory requirements for the financial sector. The FCA is responsible for the conduct of around 58,000 businesses which employ 2.2 million people and contribute around £65.6 billion in annual tax revenue to the economy in
240-490: The Money Laundering Act 2017 . The authority has significant powers, including the power to regulate conduct related to the marketing of financial products. It is able to specify minimum standards and to place requirements on products. It has the power to investigate organisations and individuals. In addition, the FCA is able to ban financial products for up to a year while considering an indefinite ban. It has
264-476: The Office of Fair Trading . In July 2023, the FCA announced reforms aiming to curb the use of social media by 'finfluencers' to encourage the purchasing of harmful financial products by UK consumers. Among the reforms was a ban on crypto incentives, such as 'refer a friend' bonuses, a compulsion for finfluencers to have clear risk warnings and for products to have a 24-hour cooling period to give first-time investors
SECTION 10
#1732779558967288-642: The FCA once the FSA ceases operations in 2013. Griffith-Jones joined the FSA board in September 2012, as a non executive director and deputy chair. Charles Randell became chair of the FCA and PSR in April 2018. In October 2021, he resigned from this position and is scheduled to leave the post in Spring 2022. On February 7, 2022, Richard Lloyd was named to begin serving as interim FCA chair from June 2022. In June 2013,
312-521: The FCA released a report from Simon Davis from Clifford Chance LLP inquiring into the events of 27/28 March 2014 relating to the press briefing of information in the FCA's 2014/15 Business Plan. The report recommended: On 16 December 2014, the Treasury select committee commenced taking evidence on the press briefing. Shortly thereafter, committee chair Andrew Tyrie said it looked as if the FCA had been guilty of an "extraordinary blunder" and had created
336-450: The FCA to identify potential risks early so they can take action to reduce the risks. There are more than 10,000 mutual societies in the United Kingdom. The FCA are responsible for registering new mutual societies, keeping public records, and receiving annual returns. Beginning December 31, 2012, independent financial advisers (IFAs) are legally obliged to follow Retail Distribution Review (RDR) rules. In order to be classed as an IFA,
360-508: The Financial Conduct Authority was criticised by the Parliamentary Commission on Banking Standards in their report "Changing Banking for Good", which stated: The interest rate swap scandal has cost small businesses dear. Many had no concept of the instrument they were being pressured to buy. This applies to embedded swaps as much as standalone products. The response by the FSA and FCA has been inadequate. If, as they claim,
384-547: The UK. In April 2015, the FCA created a separate entity, the Payment Systems Regulator (PSR), in accordance with section 40 of the Financial Services (Banking Reform) Act 2013. The PSR's role is "to promote competition and innovation in payment systems, and ensure they work in the interests of the organisations and people that use them". From May 2019 some victims of authorized push payment fraud are eligible to receive
408-670: The United Kingdom. On 19 December 2012, the Financial Services Act 2012 received royal assent , and it came into force on 1 April 2013. The Act created a new regulatory framework for financial services and abolished the Financial Services Authority . Specifically, the Act gave the Bank of England responsibility for financial stability, bringing together macro and micro prudential regulation, and created
432-487: The following three types of authentication when customers make online payments over €30 in the EEA: The FCA published new Listing Rules in 2024, aiming to simplify the UK listings regime, marking the most significant changes in over three decades. These rules, effective from 29 July 2024, created a single listing category and streamlined eligibility criteria to encourage a wider range of companies to issue shares in
456-508: The increase in mortgage interest rates of the Bank of Ireland 's subsidiary of the United Kingdom. There had been calls for the resignation of chairman John Griffith-Jones because of his responsibility for auditing HBOS as chairman of KPMG at the time of the financial crisis of 2007–08 . There has also been criticism of Chief Executive Martin Wheatley because of his responsibility for the minibond fiasco in Hong Kong. On 10 December 2014,
480-411: The power to instruct firms to immediately retract or modify promotions which it finds to be misleading and to publish such decisions. Furthermore, the FCA is able to freeze assets of individuals or organisations under investigation, regardless of whether they are innocent or guilty. The authority has been responsible for regulating the consumer credit industry since 1 April 2014, taking over the role from
504-591: The regulators do not have the power to deal with these abuses, then it is for the Government and Parliament to ensure that the regulators have the powers they need to enable restitution to be made for this egregious mis-selling.—"Changing Banking for Good: Report of the Parliamentary Commission on Banking Standards", House of Lords , House of Commons The FCA was rebuked by the Treasury Select Committee for lack of concern over
SECTION 20
#1732779558967528-504: The time to adequately consider their investment decision. The move came following a significant rise in social media promotion of financial products by finfluencers in 2022, with 14 times more having been posted than the previous year. The Financial Services Act of 2012 set out a new system for regulating financial services in order to protect and improve the UK's economy. The FCA will supervise banks to ensure they treat customers fairly, encourage innovation and healthy competition, and help
552-535: Was appointed chief executive on 26 January 2016. After Bailey moved to become the Governor of the Bank of England , it was announced that Christopher Woolard would become the Interim Chief Executive. In June 2020, it was announced that Woolard would be succeeded on a permanent basis by Nikhil Rathi . In June 2012, it was confirmed that John Griffith-Jones would become the non executive chair of
576-401: Was enacted by the Dutch authorities as early as 1610. The objectives of financial regulators are usually: Acts empower organizations, government or non-government, to monitor activities and enforce actions. There are various setups and combinations in place for the financial regulatory structure around the globe. Exchange acts ensure that trading on the floor of exchanges is conducted in
#966033