Financial Services Act
On 19 November 2009 the Chancellor of the Exchequer introduced the Financial Services Bill into Parliament. The Bill, which reforms financial services regulation and contains provisions to improve redress for consumers, and financial education and awareness, received Royal Assent on 8 April 2010. The Act includes:
- A new statutory financial stability objective for the Financial Services Authority (FSA);
- A new independent consumer financial education body, established by the FSA;
- Provision for regulations on remuneration transparency, and a duty for the FSA to make rules on remuneration;
- A duty for the FSA to make rules requiring firms to produce recovery and resolution plans (also known as “living wills”);
- Power for the FSA to ban short selling of certain instruments, and establish a permanent disclosure regime; and
- Greater disciplinary powers for the FSA, including earlier disclosure of investigations.
Background to the Act
The Financial Services Act contains many of the proposals that were set out in the Government’s Reforming financial markets paper published in July 2009. The paper presents the Government’s analysis of the causes of the financial crisis, and sets out a series of proposals for reforming financial market regulation and consumer protection.
The Government asked for views in relation to specific proposals for primary legislation as well as more general areas for discussion. More than 100 responses were received, and meetings and workshops held with a wide range of stakeholders. The Government’s subsequent analysis is set out in its response to the consultation.
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