Today, April 1, 2013 see the introduction of one of the most significant and far reaching changes to UK Financial Services regulation for many years. The change referred to is of course the splitting of the Financial Services Authority (FSA) into two new regulatory bodies, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Who is the Financial Conduct Authority (FCA)?
The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. Its aim is to protect consumers, ensure the industry remains stable and promote healthy competition between financial services providers. It will supervise the conduct of approximately 26,000 firms across all financial industry sectors and the prudential standards of approximately 23,000 firms not regulated by the Prudential Regulation Authority (PRA).
The Financial Conduct Authority (FCA) has one overriding purpose; to make financial markets work well which is underpinned by three main objectives:
1. Delivering consumer protection: securing an appropriate degree of protection for consumers.
2. Enhancing market integrity: protecting and enhancing the integrity of the UK financial system.
3. Building competitive markets: promoting effective competition in the interest of consumers.
Who is the Prudential Regulation Authority (PRA)?
The Prudential Regulation Authority (PRA) is part of the Bank of England and responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms.
The Prudential Regulation Authority (PRA) has two statutory objectives:
- To promote the safety and soundness of all the firms it regulates. This involves firms having resilience against failure and — in the event they do fail, or simply in the course of business — avoiding harm resulting from disruption to the continuity of provision of financial services. In promoting safety and soundness, the PRA will be required to focus primarily on the harm that firms can cause to the stability of the UK financial system.
- Specifically for insurers, to contribute to the securing of an appropriate degree of protection for those who are, or may become, policyholders
It makes an important contribution to the Bank’s core purpose of protecting and enhancing the stability of the UK financial system.