Micro-Scholarship, What it is, How can it help me.pdf
Pob stage 1 seminar 8 sbd
1. Principles of Business
Seminar: The role of regulation in
financial services
Topic Number: 8
2. 2
Overview
Over the years the UK financial services industry has had a series
of serious regulatory breaches ranging from endowment
mortgages and PPI to the credit crisis. Many commentators have
blamed the lack of regulatory oversight as a contributory factor
to the enduring economic recession.
In this seminar, we will look at the role of regulation in financial
services, paying close attention to the newly formed regulatory
body; the FCA.
We will consider the role of the FCA in financial regulation and
look specifically at what enforcement powers it has. Thereafter,
we will look at the key principles that it adopts in order guide
further action.
Given, financial services operates in a global environment we will
evaluate how the FCA operates on an international scale. Finally,
we will critically evaluate the success of the FCA since its
inception in 2013.
3. 3
Learning outcomes of this seminar
• Describe the role of the FCA in regulating the financial
services industry
• Determine and articulate the key principles that guide the
FCA
• Evaluate and articulate how the FCA operate on an
international scale
• Determine and describe the level of success the FCA has
had since inception
4. Agenda for this seminar
What is the role of the FCA in financial regulation?
What are the principles of good regulation?
How does the FCA operate internationally?
Evaluate the success of the FCA since inception
5. Structure for the session
You will have
15 minutes to
discuss each
question
We will have a
de-brief at the
end of each 15
minutes to hear
your thoughts
on each area
Feel free to ask
questions but
please do not
have separate
conversations
‘we are all in
this together’!
6. Introduction to the FCA
View video: https://www.youtube.com/watch?v=I8kXbEW7bPE
7. From FSA to FCA
In the wake of the financial crisis, the Financial Services Act of
2012 set out a new system for regulating financial services in
order to protect and improve the UK’s economy.
Our purpose is to make sure markets work well so that
consumers get a fair deal.
We maintain and ensure the integrity of the market
regulate financial services firms so that they give consumers a
fair deal
ensure the financial services market is competitive
Source: FCA, 2014
12. The FCA Remit
To ensure that the relevant markets function well.
This responsibility has been set out for us by the Government,
.
according to the Financial Services Act 2012
To secure an
appropriate
degree of
protection for
consumers
To protect and
enhance the
integrity of the
UK financial
system
To promote
effective
competition in
the interests of
consumers
To support this, they have three operational objectives:
Source: FCA, 2014
14. 8 Key Principles
Efficiency & Economy Proportionality
We need to use our
resources in the most
efficient and economical
way. As part of this the
Treasury can commission
value-for-money reviews of
our operations.
We must ensure that
any burden or restriction
that we impose on a person
or activity is proportionate
to the benefits we expect as
a result. To judge this, we
take into account the costs
to firms and consumers.
Source: FCA, 2014
15. 8 Key Principles
Sustainable growth Consumer responsibility
We must ensure there is a
desire for sustainable
growth in the economy of
the United Kingdom in the
medium or long term.
Consumers should take
responsibility for their
decisions.
Source: FCA,
2014
16. 8 Key Principles
Senior management
responsibility
Recognising businesses carried
out by different persons
A firm’s senior
management is
responsible for the firm’s
activities and for
ensuring that its
business complies with
regulatory requirements.
Where appropriate,
we exercise our functions
in a way that recognises
differences in the nature of,
and objectives of, businesses
carried on by different persons
subject to requirements
imposed by or
under FSMA.
Source:
FCA, 2014
17. 8 Key Principles
Openness and disclosure Transparency
We should publish
relevant market
information about
regulated persons or
require them to publish
it (with appropriate
safeguards).
We should exercise
our functions as
transparently as possible.
It is important that we
provide appropriate
information on our
regulatory decisions, &
that we are open &
accessible
Source: FCA,
2014
19. A globally coordinated effort
Bank for International
Settlements
International Association of
Insurance Supervisors
Financial Stability
Board
International Organisation
of Securities Commission
Source: FCA, 2014
20. Role of these bodies
These bodies aim to
foster fair, efficient,
transparent and sound
markets, by promoting
international co-operation
and mutual
assistance, by
developing the highest
standards of regulation,
and by exchanging
experience to help the
development of
domestic markets.
They set international
regulatory standards,
and promote the
integrity of markets by
encouraging the
implementation and
enforcement of these
standards.
Source: FCA, 2014
21. EU Engagement
The FCA actively engages with the EU and devotes a significant
share of its resources to working with European institutions and
fellow EU regulators.
They do so because:
European Supervisory Authorities (ESAs) have significant
powers to propose draft rules and to take decisions that are
binding on national supervisors and firms.
Deepening the single market in financial services has involved a
comprehensive legislative programme, which must then be
implemented and applied in the UK.
The activities of cross-border firms require regulators to
enhance their levels of co-operation and co-ordination, if
regulatory duplication is to be avoided and risks are to be better
identified, prioritised and mitigated.
Source: FCA, 2014
22. International Engagement and Assistance
As an international financial centre, the UK is host to a wide
range of overseas firms and is home to financial markets that
are highly integrated with the global economy. Many UK firms
also have significant operations overseas. As a result, there is
an important international dimension to our work.
The FCA is a signatory to the IOSCO and ESMA MoUs, and has
entered into various other MoUs on a bilateral basis, which
provide for international co-operation and the exchange of
information.
Under the Financial Services and Markets Act 2000 (FSMA), the
FCA has wide powers to compel the production of information,
obtain documents and to require the attendance of persons at
interviews. These powers may be exercised at the request of
overseas regulators. The following will guide overseas
regulators seeking the assistance of the FCA.
Source: FCA, 2014
