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.