A new approach to financial regulation: judgement, focus and stability

Front Cover
The Stationery Office, Jul 26, 2010 - Business & Economics - 71 pages
This document outlines the Government's programme of reform to renew the UK's system of financial regulation. It believes that weaknesses were inherent in the tripartite approach whereby three authorities - the Bank of England, the Financial Services Authority and the Treasury - were collectively responsible for financial stability. The Government will create a new Financial Policy Committee (FPC) in the Bank of England with primary statutory duty to maintain financial stability. The FPC will be given control of macro-prudential tools to ensure that systemic risks to financial stability are dealt with. This macro-prudential regulation must be co-ordinated with the prudential regulation of individual firms. Operational responsibility for prudential regulation will transfer from the FSA to a new subsidiary of the Bank of England, the Prudential Regulation Authority. The third development is the creation of a dedicated Consumer Protection and Markets Authority (CPMA) with a primary statutory responsibility to promote confidence in financial services and markets. Protection of consumers will be delivered though a strong consumer division within CPMA. The document also covers: the issue of market regulation; co-ordination of the regulatory bodies in a potential crisis; the next steps, including public consultation, legislative passage and operational implementation. The Government will, after considering responses, produce more detailed proposals - including draft legislation - for further consultation in early 2011, with a view to having legislation on the statute book within two years.
 

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Contents

Introduction
3
The Bank of England and Financial Policy Committee
9
Prudential Regulation Authority
23
Consumer Protection and Markets Authority
31
Markets and infrastructure
41
Crisis management
47
Implementation
53
Annex A Consultation questions and how to respond
57
Annex B Preliminary impact assessment
61
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