Financial Services Act 2012
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The Financial Services Act 2012 is an Act of the Parliament of the UK that was introduced to strengthen and reform financial regulation in the aftermath of the global financial crisis. It received royal assent on December 19, 2012, and introduced significant changes to the regulatory framework governing the financial services industry in the UK.
Creation of Prudential Regulation Authority: The Act established the Prudential Regulation Authority as a subsidiary of the Bank of England. The Prudential Regulation Authority is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers, and major investment firms.
Financial Policy Committee: The Act created the Financial Policy Committee, which is also a subsidiary of the Bank of England. The Financial Policy Committee is responsible for identifying and addressing systemic risks to the stability of the UK financial system. It has the authority to issue recommendations and directions to regulatory bodies and institutions.
Reform of regulatory structure: The Act introduced changes to the regulatory structure by abolishing the Financial Services Authority and transferring its responsibilities to the Prudential Regulation Authority and the Financial Conduct Authority. The Financial Conduct Authority focuses on conduct regulation and consumer protection, while the PRA oversees prudential regulation.
Enhanced consumer protection: The Act aimed to improve consumer protection in the financial services industry. It introduced measures to enhance transparency, promote fair treatment of consumers, and strengthen regulatory powers to take action against misconduct and misleading financial products.
Regulatory powers and sanctions: The Act expanded the powers of regulatory authorities, including the Prudential Regulation Authority and the Financial Conduct Authority, to enforce regulatory standards and take action against firms and individuals that breach regulations. It introduced tougher penalties and sanctions for misconduct, including increased fines and criminal sanctions.
Reform of Financial Services Compensation Scheme: The Act made changes to the Financial Services Compensation Scheme, which provides compensation to consumers in cases of financial loss due to the failure of regulated firms. It extended the coverage and increased the compensation limits under the scheme.
The Financial Services Act 2012 was part of wider financial regulatory reforms in the UK aimed at enhancing financial stability, improving consumer protection, and strengthening the regulatory framework for the financial services industry. It has played a significant role in shaping the post-crisis financial regulatory landscape in the UK.
Creation of Prudential Regulation Authority: The Act established the Prudential Regulation Authority as a subsidiary of the Bank of England. The Prudential Regulation Authority is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers, and major investment firms.
Financial Policy Committee: The Act created the Financial Policy Committee, which is also a subsidiary of the Bank of England. The Financial Policy Committee is responsible for identifying and addressing systemic risks to the stability of the UK financial system. It has the authority to issue recommendations and directions to regulatory bodies and institutions.
Reform of regulatory structure: The Act introduced changes to the regulatory structure by abolishing the Financial Services Authority and transferring its responsibilities to the Prudential Regulation Authority and the Financial Conduct Authority. The Financial Conduct Authority focuses on conduct regulation and consumer protection, while the PRA oversees prudential regulation.
Enhanced consumer protection: The Act aimed to improve consumer protection in the financial services industry. It introduced measures to enhance transparency, promote fair treatment of consumers, and strengthen regulatory powers to take action against misconduct and misleading financial products.
Regulatory powers and sanctions: The Act expanded the powers of regulatory authorities, including the Prudential Regulation Authority and the Financial Conduct Authority, to enforce regulatory standards and take action against firms and individuals that breach regulations. It introduced tougher penalties and sanctions for misconduct, including increased fines and criminal sanctions.
Reform of Financial Services Compensation Scheme: The Act made changes to the Financial Services Compensation Scheme, which provides compensation to consumers in cases of financial loss due to the failure of regulated firms. It extended the coverage and increased the compensation limits under the scheme.
The Financial Services Act 2012 was part of wider financial regulatory reforms in the UK aimed at enhancing financial stability, improving consumer protection, and strengthening the regulatory framework for the financial services industry. It has played a significant role in shaping the post-crisis financial regulatory landscape in the UK.
