A: UK's Financial Services Regulatory Landscape - created from Mind Map

Financial Conduct Authority

Prudential Regulation Authority

Financial Policy Committee

- Strategic objective is to 'ensure that relevant markets function well' - Operational objectives:    - consumer protection    - integrity    - competition

- promote safety & soundness of systemically important firms - protect policyholders in event of a firm's failure -Approach to regulation & supervision:     - judgement-based     - forwad-looking     - focused

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Prudential Regulatory AuthorityPrimary objective: promote safety & soundness of firms it regulates (banks/b.soc/credit unions/insurers/major invstmnt firms)Secondary objective: ensure PRA authorised persons carry on in way which avoids adverse effects on stability of UK financial system minimise adverse effects that failure of PRA authorised person could be expected to have on stability of UK financial system Objective to insurers: secure appropriate degree of protection for those who are, or may become policyholdersTo secure an appropriate degree of protection for the reasonable expectation of policyholders as to the distribution of surplus under with-profits policies.Threshold Conditions - include firms maintaining capital & liquidity and having suitable mgmnt.PRA uses two key tools: Regulation - standards or policies Supervision - assess risks firms pose & takes action where req'd Characteristics: judgement-based: determine if firms are safe & sound forward-looking: assess firms against future potential risk also & take early action where req'd focused: focus on firms that pose greatest risk to stability of UK financial system & policyholders Accountable to Parliament, the board consists of; governor of Bank of England, deputy governor for financial stability, chief exec of PRA, & independent non-exec members.  Global & European engagementActively involved in work of Financial Stability Board, Basel Committee on Banking Supervision, International Association of Insurance Supervisors, and the Joint Forum. Key responsibility to supervise overseas firms operating in the UK & UK groups operating abroad.  Will participate in 'supervisory colleges' for firms with significant operations in the UK.Will engage actively with relevant European institutions & EU in on-going development & implementation of single market regulators.  Bank of England will be voting member on ESRB.ESA seek to improve co-ordination between national supervisory authorities in EU.

Financial Policy CommitteeRun by Bank of England.  Power to take various policy measures - macro-prudential tools: ensuring banks increase capital in good times in protection for the bad. enforcing targeted capital req's on specific sectors or asset calsses limiting excessive build-up of on-and-off balance sheet leverage Statutory obligation to limit impact of policies on economic growth.Governance12 members, 6 execs of Bank of England, 5 from outside, and non-voting Treasury member.  Chaired by Bank of England governor, includes extg deputy governors for monetary policy & financial stability, & newly created deputy governor for prudential regulation.Chief exec of FCA also sits, as for 4 independent external members appointed by the Chancellor.AccountabilityTreasury provides guidance to help shape its pursuit of financial stability.  Req'd to respond to Treasury's recommendations.  May reject any it does not agree with.  Gov't req's a twice yearly Financial Stability Report & published records of each FPC mtg within 6 weeks.

Financial Conduct AuthorityStrategic objective: ensure relevant markets function well.Operational objectives: consumer protection integrity competition Financial Services Act 2012 will facilitate transfer of consumer credit regulation from OFT to FCA to deliver comprehensive improvement in consumer protection.  FCA takes on responsibility from 1st April 2014.New product intervention power granted by 2012 Act, to ban or impose restrictions on financial products.New powers of disclosure to take formal action against misleading financial promotions & disclose fact it has done so.

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