Guide to UK regulatory reform
Our online technical resource "Phoenix" is designed to assist our clients and contacts when conducting their UK regulatory reform projects. It sets out the latest developments and timing of the reform programme plus the key resource papers from the Treasury, Bank of England, FSA and the ICB. Clients and contacts are also given access to our latest briefing notes and clients have access to our latest templates.
A brief chronology of the Coalition Government's proposed reforms is set out below. Further information is set out in the preceding pages.
At the Queen’s speech on 25 May 2010, the Coalition Government announced that it would introduce a Financial Services Regulation Bill (the Bill). At the time little detail on the Bill was published apart from the reiteration of two comments that the Conservatives made in opposition. First, that the FSA would be abolished and secondly that the Bank of England would be placed at the heart of the UK’s financial system with both control of macro-prudential policy and oversight of micro-prudential regulation.
In June 2010 the Chancellor of the Exchequer announced the creation of an Independent Commission on Banking (ICB), chaired by Sir John Vickers. The purpose of the ICB is to formulate policy recommendations covering structural measures that are designed to reform the UK banking system and promote stability and competition, including the complex issue of separating retail and investment banking functions.
On 26 July 2010, the Treasury published the Coalition Government’s first consultation document on the proposed reforms. The consultation document was called A new approach to financial regulation judgement, focus and stability. The Treasury published a second consultation document in February 2011 which was called A new approach to financial regulation: building a stronger system. Both consultation documents confirmed the essential elements of the reforms in that the FSA will be abolished and in its place:
- A new macro-prudential regulator, the Financial Policy Committee (FPC), established within the Bank of England.
- A new prudential regulator, the Prudential Regulation Authority (PRA), established as a subsidiary of the Bank of England.
- A new conduct of business regulator, originally titled the Consumer Protection and Markets Authority but subsequently changed to the Financial Conduct Authority (FCA).
In March 2011 the FSA published its paper setting out initial thoughts concerning the regulatory approach of the FCA. This was followed in May 2011 with the FSA and the Bank of England publishing a paper on the PRA’s regulatory approach for banks and larger investment firms. A paper on the PRA’s approach to insurers was also published on 20 June 2011.
On 16 June 2011, the Treasury published a consultation document and white paper entitled A new approach to financial regulation: the blueprint for reform (the White Paper). The White Paper was a significant milestone because it provided further detail on the Government’s regulatory reform proposals and set out for the first time a draft of the Financial Services Bill (which was originally called the Financial Services Regulation Bill) which will make the necessary changes to existing legislation.
The ICB published its Final Report on 12 September 2011.
On 19 December 2011, the Parliamentary Joint Committee on the Bill published its report on the Bill which included comments on the recommendations proposed by the ICB.
On 13 January 2012, the House of Commons Treasury Select Committee published a report on the proposed FCA.
On 26 January 2012, the Bill had its first reading in the House of Commons. The following day HM Treasury published a paper entitled A new approach to financial regulation: securing stability, protecting consumers. This accompanied the first formal publication of the Bill.
The Bill received Royal Assent on 19 December 2012 and will be known as the Financial Services Act 2012 (the Act). The Act comes into force from 1 April 2013. The Government will bring forward secondary legislation in early 2013, in advance of the launch of the Act.