In a speech delivered on June 16, the Chancellor of the Exchequer announced that the UK Government intended to transfer the regulatory functions of the UK Financial Services Authority (FSA) to the Bank of England and certain proposed new regulatory bodies. The FSA will cease to exist in its current form. In its place, the government intends to establish the following new entities between now and the end of 2012:
- Prudential Regulation Authority (PRA)—The PRA, which will be a subsidiary of the Bank of England, will be responsible for the prudential regulation of financial firms, including banks, investment banks, building societies and insurance companies. Hector Sants, the current FSA Chief Executive, will become the PRA chief executive and also a deputy governor of the Bank of England.
- Consumer Protection and Markets Authority (CPMA)—The CPMA will regulate firms providing financial services to consumers. It will also be responsible for retail and wholesale financial services conduct of business.
- Financial Policy Committee (FPC)—The FPC will be a committee of the Bank of England. It will have responsibility for macro issues potentially affecting economic and financial stability. An interim FPC will be established during the course of 2010. The Governor of the Bank of England will chair the FPC, and its members will include the PRA chief executive and the CPMA chair.
- Economic Crime Agency (ECA)—The ECA will be created to prosecute economic and financial crimes. This is currently in the hands of a number of agencies, including the FSA, the Serious Fraud Office, the Office of Fair Trading and the Serious Organised Crime Agency.
A consultation document providing details of the Government’s proposals will be issued shortly.