The Reorganisation of Financial Services Supervision in the UK: An Interim Progress Report
University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI)
November 1, 2011
University of Cambridge Faculty of Law Research Paper No. 49/2011
The UK has embarked upon a programme of reform that will result in the Financial Services Authority (FSA) being split into two separate authorities, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). A new BoE committee, the Financial Policy Committee (FPC), will perform macroprudential systemic oversight functions. The BoE will assume responsibility for the oversight of clearing and settlement systems in addition to its existing responsibility for payment systems. Crisis management and bank resolution functions will also sit with the BoE.
The new arrangements are expected to be fully up and running by the end of 2012. A considerable amount of practical preparatory work is already underway, including the establishment of an interim FPC and an internal re-organisation within the FSA to split it into separate prudential and conduct units.
Primary legislation is required to establish the legal framework for the new institutional structure. At the time of writing (October 2011), a Joint Committee of the House of Lords and House of Commons is conducting pre-legislative scrutiny of the draft Bill, and HM Treasury has also recently completed its own public consultation on the draft Bill.
This paper, drawn from work done for the purposes of giving evidence before the Joint Committee, focuses on certain key features of the draft Bill that are emerging from the scrutiny process. It provides an overview of salient features of the current debate.
Number of Pages in PDF File: 20
Keywords: financial market supervision, institutional structure, reform
JEL Classification: G01, G18, G29, G28, H12, K23
Date posted: November 1, 2011