Yudu - Journey to the FCA

THE CREATION OF THE FCA

In the Financial Services Bill, currently under scrutiny in the House of Lords, the Government has set out the focus for the Financial Conduct Authority. It outlines that the FCA should as a statutory objective ensure that relevant markets work well. This will, subject to Royal Assent, be the FCA’s focus.

Underpinning this objective the Government has outlined three key operational objectives. These objectives focus on the integrity of the market, consumer protection and competition. In time we will ensure that in every piece of work we undertake we consider the impact on consumers, on competition and on the wider integrity of markets.

This will mean that on every decision we take moving forward the FCA will examine the impact on competition, on consumers and integrity. The FCA will consider how best to do this, especially as both competition and consumer outcomes can be at odds with one another. We will take considered decisions on the best way forward.

The new system for regulating financial services in the UK, as proposed by the Government, will involve a number of bodies, each with their own responsibilities and objectives:

• The FCA will be responsible for ensuring that relevant markets function well, for the conduct supervision of financial services firms, as well as the prudential supervision of firms not supervised by the Prudential Regulation Authority (PRA).

• The PRA will be responsible for promoting the safety and soundness of deposit-taking firms, insurers and systemically important investment firms.(4)

• The Bank of England will be responsible for protecting and enhancing the UK’s financial stability. It has primary operational responsibility for financial crisis management and is responsible for oversight of payment systems, settlement systems and clearing houses. It is also the UK’s resolution authority.

• The Financial Policy Committee (FPC), within the Bank of England, will be responsible for contributing to the Bank of England’s objective of protecting and enhancing the stability of the UK financial system, and, subject to that, supporting the economic policies of the Government, including its objectives for growth and employment. It will focus on identifying, monitoring and managing risks to the system.

• Her Majesty’s Treasury (the Treasury) has overall responsibility for the UK’s financial system, the institutional structure of financial regulation, and the legislation that governs it, both domestic and international.

4 More information on how firms will be split between the FCAand PRA is set out in this document: www.fsa.gov.uk/static/pubs/other/designation.pdf. 5 The PRA will have the power to deploy a veto where it considers that action we are taking may threaten financial stability, or cause the failure of a PRAauthorised person in a way that would adversely affect financial stability.

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Foreword by

John Griffith-Jones Introduction by

Martin Wheatley: Our vision for the Financial Conduct Authority

Chapter 1:

The creation of the FCA: Spotlight on some of our new powers

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Chapter 2: Protecting

the perimeter Chapter 3:

Ensuring firms continue to meet our standards

Chapter 4:

Taking action against firms that do not meet our standards

Chapter 5: Building our

understanding of the markets

Chapter 6:

Maintaining effective relationships

Chapter 7:

Accountability, transparency and measuring our success

Annex A:

Specific questions for consultation

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