50 years of regulation

When the 1986 Act was implemented on A-Day (appointed day) in 1988 it spawned a number of regulatory bodies. The Government delegated to the SIB its powers under the act and in turn the SIB recognised a number of bodies to carry out the front line regulation for particular sectors of the industry.

Principal among these were two of the self regulatory organisations (SROs) called the Financial Intermediaries Managers and Brokers Association (FIMBRA) – which itself emerged from NASDIM - and the Life Assurance and Unit Trust Regulatory Organisation (LAUTRO).

Although operating within a statutory framework the essence of the regime was self regulatory; FIMBRA, regulating IFAs, and LAUTRO regulating providers and their direct salesforces, were directed by boards of practitioners.

Another scandal, the plundering of the Mirror Group pension fund by Robert Maxwell, caused the Government to order a review of the adequacy of the SIB’s monitoring of the Investment Management Regulatory Organisation (IMRO).

That review was, however, more far reaching and considered also the need for a new regulator to cover the whole retail investment market and so to take over the role of both LAUTRO and also FIMBRA, the latter of which had been suffering chronic funding problems.

This was the so called step change in regulation, which led to the formation of the Personal Investment Authority (PIA). The PIA opened for business in 1994 and was handed a poisoned chalice at birth in the form of the review of past pensions transfer and opt out business.

Back to the drawing board

By the mid 1990s there was growing criticism that almost a decade of self regulation had failed to deliver the standard of consumer protection expected by the public. A priority for the new Labour Government was to reform regulation. The plan for how this was to be achieved was set out by Sir Andrew Large in 1997.

In essence this was for the establishment of a single, statutory regulator. The legislation to give effect to this change seemed to move at a snail’s pace with the Financial Services and Markets Act (FISMA) not reaching the statute books until 2000 and not being implemented until 2001.

This, however, masked rapid change at the working level. In 1997 the SIB renamed itself as the Financial Services Authority (FSA) and in fairly short order the staff of the SROs were transferred to the FSA. Then, under service level agreements the FSA delivered the regulation for which the SROs were still formally responsible until the new legislation was implemented.