Financial Services Act

The UK Financial Services and Markets Act 2000 consolidated a fragmented regulatory position. In so doing, it created the Financial Services Authority that is primarily concerned with banking, insurance and investments. However, it has powers for most things financial.

Interestingly, the Authority is independent of government. It is financed by the industry it was set up to police. While the Treasury appoints the board, which sets overall policy, the executive makes all day-to-day decisions. However, the Authority is ultimately accountable to Parliament through the Treasury.

The Authority also has powers entrusted to it under more than half a dozen other Acts and EU directives, making it one of the most, if not the most, powerful regulator in the UK.

The Authority has four statutory objects:

  1. To maintain confidence in the financial system.
  2. Promote public understanding of the financial system.
  3. Secure the appropriate degree of protection for consumers.
  4. Reduce financial crime, and reduce the extent to which it is possible for a business to be used for a purpose connected with financial crime.

As can be imagined, with such complex and arcane legislation concerned with money, the audit requirements are stringent. Record keeping has to be precise and is subject to inspection at any time. Essentially, the financial sector is the most heavily regulated in the UK.