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Guide to Regulation Post-FSA

    CPD
    Approx.60min

    Introduction

    Direct regulation has been taken over by two new bodies in what has been termed a ‘twin peaks’ structure that separates conduct and prudential regulation.

    Financial advisory firms are now overseen by the Financial Conduct Authority, which will take responsibility for ensuring consumer protection and market regulation, while the Prudential Regulatory Authority, which sit within the Bank of England, will cover the prudential supervision of larger firms such as banks, insurers and major investment houses.

    The third body, the Financial Policy Committee, is a new committee within the Bank of England that will operate in a similar fashion to the Monetary Policy Committee and that is tasked with monitoring macroeconomic risks.

    This guide provides insight on the new regime as it affects advisers, filtering the official pronouncements to produce an understandable guide about how the new regulatory system will work on the ground.

    It will cover:

    • the reasons for the new ‘twin peaks’ regime;

    • the new focus and approach of the FCA compared to the Financial Services Authority;

    • how smaller firms will be supervised;

    • the likely affects of the FCA’s new ‘judgement-based’ supervision;

    • what new regulatory powers there are and how they will work; and

    • whether there has there been a shift in focus from firms to individuals.

    Supplementary material was supplied by Rebecca Prestage, head of policy at the Consulting Consortium; Simon Morris, financial services partner at CMS Cameron McKenna; and Sona Ganatra, senior associate at Fox Williams.

    In this guide

    CPD
    Approx.60min

    Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

    1. What is the main power of the Financial Policy Committee?

    2. What does the regulator’s new focus on conduct mean for firms, according to Mr Morris?

    3. Which of the new conduct categories is likely to apply to most advisory firms?

    4. What is the effect of the new supervisory approach on low-risk firms, according to Ms Prestage?

    5. What will the FCA be able to do about ‘flawed’ products?

    6. How can managing directors protect themselves from FSA censure and fines?

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