Proposed UK Financial Services Bill Would Radically Change UK Regulatory Structure

The Chancellor of the Exchequer has proposed a radical reformulation of financial services regulation in the UK unifying for the first time macro-prudential regulation, day-to-day oversight, and conduct of business regulation of all financial services firms. Under the UK's current tripartite system, HM Treasury, the Bank of England, and the Financial Services Authority (FSA) share responsibilities.  All three entities have come under fire for failing to anticipate the financial crisis, and the tripartite system has been blamed on many fronts for failing to deal with the crisis in a timely and effective manner.  This legislation seeks to address some of the division and miscoordination alleged to have occurred amongst the tripartite entities. The proposed three new structure would do away with the FSA, and unify regulation and supervision under new structures housed in the Bank of England.

1. The Financial Policy Committee (FCP) will be responsible for identifying and acting to reduce systemic risks, and working to protect the UK financial system. The FCP will not directly supervise any financial firms.
2. The Prudential Regulatory Authority (PRA) will be responsible for micro-prudential regulation of banks, building societies, insurers, and certain investment firms considered to be of systemic importance.
3. The Financial Conduct Authority (FCA) will inherit most of the duties of the FSA, overseeing the manner in which individual financial firms conduct their business.