The Financial Conduct Authority and the Prudential Regulation Authority begin work on the 1st of April tasked with replacing the Financial Services Authority.
As the Financial Services Act 2012 (the 2012 Act) came into force, the government delivered on its 2010 promise to dismantle the current regulatory body, due to the 2007/2008 financial crisis. The 2012 Act establishes a new financial regulation set up with separate regulators responsible for monitoring finance and the conduct of all authorised finance providers and advisors.
The Financial Conduct Authority (FCA) has inherited the majority of FSA’s roles and functions and will be responsible for regulating the conduct of all authorised firms.
The Prudential Regulation Authority (PRA), a subsidiary of the Bank of England, will be responsible for the micro-prudential regulation of systemically important authorised firms.
The Financial Policy Committee (FPC), a committee of the Bank of England, will be responsible for assisting the Bank of England in achieving its financial stability objective and will be given powers of recommendation and direction over FCA and PRA to address systemic risks.
The Bank of England will have overall responsibility for financial stability, be the regulator of recognised clearing houses, and have the power to direct a UK clearing house in certain circumstances.
Firms regulated only by FCA will number approximately 23,000 and will include independent financial advisers, investment managers, most investment firms, insurance brokers, mortgage brokers, other brokers, non-deposit-taking lenders, corporate financiers, wholesale firms, custodians, professional firms, investment exchanges, collective investment schemes, managing agents, and others.
The FCA will have a single strategic objective to ensure that markets for financial services work well to secure an appropriate degree of protection for consumers, protect and enhance the integrity of the UK financial system and promote effective competition in the consumer interest.
FCA will have 2,848 staff members in place for 2013–2014 and require total funding of £432.1 million by its constituency of authorised firms. In contrast, FSA employed roughly 4,000 staff members in 2012–2013, and its budget for that period was £578 million.