New Financial Services Regulations in the UK and its Impact on Records Management

New Financial Services Regulations in the UK and its Impact on Records Management

Submitted by Steve Formica on Sat, 03/23/2013 - 23:27 in

UK Financial Services Reform: Putting the Customer First
Some time ago, I wrote here that the British Chancellor of the Exchequer, George Osborne, intended to put the much maligned Financial Services Authority (FSA) out of its misery and replace it with a new framework for financial services regulation. Mr. Osborne has been true to his word. His stated aim is to improve consumer protection and enforce the stability of the City and the banking system.

Whither the FSA?
The FSA will cease to exist on April 1, 2013 and two new regulatory bodies will replace it: the Financial Conduct Authority (FCA), as an independent regulatory body, and the Prudential Regulation Authority (PRA), as part of the Bank of England.

How will this “twin peaks” regulatory structure operate?
The PRA will provide prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms. Its stated goal is to “promote the safety and soundness” of the UK’s financial system. The FCA will be responsible for the protectionof consumers and for ensuring the integrity of  market operations. The FCA will also be engaged in promoting competition, overseeing the proper operation of the market, and general conduct issues for all financial services firms.

How will the changes affect firms?
A financial firm operating under the FCA’s supervision that fails to meet best practice standards and procedures concerning consumer orientated outcomes could face an unlimited fine, a ban or an order to pay compensation. The PRA will take an interventionist approach with those firms it considers to present the greatest risk to the stability of the financial system. How will the FSA Handbook change? The majority of the Rules in the FSA Handbook will remain the same, including their current division into chapters, but will be incorporated into one of the FCA Handbook or the PRA Handbook, or into both.

How are the mechanics of the change going to take place?
Until 31 March, any amendments to the FSA Handbook will state whether they apply to FCA-regulated firms, PRA-regulated firms or to both. At the end of the legal changeover, both the FCA and the PRA will amend their respective regulations as independent bodies. The PRA will gradually create its own rulebook, moving on from the material inherited from the FSA.

As the leading international document retention information provider, Fontis International will be providing ongoing updates regarding the new regulatory system and its effect on both financial firms and consumers throughout the transition period and beyond.