On 17 February 2011 the British government published a consultation document which lays out the new architecture to financial services regulation. The document proposes, inter alia, the foundation of a new Financial Conduct Authority (FCA). The aim of the government is to protect and enhance confidence in the UK financial system with the new authority.
The government justifies this step by highlighting that good conduct was an essential element of a strong and efficient financial system. The objective of the FCA was to set out the standards to which firms are expected to adhere and to monitor and enforce compliance by firms with these standards.
The consultation document also announces a change in the culture of regulation: While the regulatory approach in the past was based on the assumption that effective retail customer protection could be achieved by scrutinising sales processes to make sure that customers were treated fairly and received appropriate and transparent information, in the future the FCA would show a greater willingness to intervene in the early stages of the product lifecycle where appropriate to deliver better outcomes for retail customers.
Further information: www.hm-treasury.gov.uk/consult_finreg_strong.htm
Source: HM Treasury