About the Financial Services Authority

The Financial Services Authority is the UK’s financial regulator, and its powers have been granted through the Financial Services and Markets Act 2000. Funded through the finance industry this is a non-government body and runs independently. The overall policy of the Financial Services Authority is set out by a Board, which includes managing directors and non-executive directors, as well as a Chief Executive Officer and a Chariman. This board is selected and appointed by the Treasury.

The Financial Services Authority is answerable to parliament through Treasury Ministers. However, it is an independent regulator that is not part of the government, and funding for the agency comes from the companies that is regulates. The FSA regulates a range of financial services and sectors, and provides information, polciies, and procedures that are designed to regulate providers and protect consumers. The FSA has a number of statutory objectives, and the agency describes these as:

•    Public awareness
•    Consumer protection
•    Market confidence
•    Reduction of financial crime

These objectives can be expanded upon. In terms of public awareness the FSA aims to promote the public’s understanding of the financial system. With regards to consumer protection the FSA aims to provide a suitable level of protection to consumers in relation to the financial industry. In raising market confidence the FSA looks to increase or maintain the confidence of the public in the finance industry. And in terms of reducing financial crime the FSA aims to reduce the potential for a financial services provider to get involved in financial crime.

The Regulatory Decisions Committee is part of the FSA and is made up of a number of practitioners and non-practitioners looking out for the public interest. This committee undertakes major regulatory decisions on behalf of the board. The Office of Fair Trading is able to scrutinise the rules and practices of the FSA, and any anti-competitive effects are reported to the Competition Commission by the Office of Fair Trading.

In its website the FSA outlines some of its main strategic aims, which is states are:

•    ‘Promoting efficient, orderly and fair markets’
•    ‘Helping retail consumers achieve a fair deal’
•    ‘Improving our business capability and effectiveness’

In terms of who it regulates the Financial Services Authority actually regulates most of the financial services markets, setting the necessary standards that these providers must meet in order to comply with regulations. The FSA has the power to take action against providers that fail to meet the set standards, thus providing protection for consumers and ensuring that certain practices and standards are adhered to by financial companies.

Information for businesses

Certain businesses must be authorized by the Financial Services Authority, as the services of products that they offer have to meet certain standards and their practices must adhere to FSA regulation. The FSA website provides a list of regulated activities where are part of the Regulated Activities Order. The list, as shown on the FSA website, includes:

•    Accepting deposits
•    Issuing e-money
•    Effecting or carrying out contracts of insurance as principal
•    Dealing in investments (as principal or agent)
•    Arranging deals in investments
•    Arranging regulated mortgage contracts
•    Arranging regulated home reversion plans
•    Arranging regulated home purchase plans
•    Managing investments
•    Assisting in the administration and performance of a contract of insurance
•    Safeguarding and administering investments
•    Sending dematerialised instructions
•    Establishing etc collective investment schemes
•    Establishing etc personal pension schemes
•    Establishing etc stakeholder pension schemes
•    Advising on investments
•    Advising on regulated mortgage contracts
•    Advising on regulated home reversion plans
•    Advising on regulated home purchase plans
•    Lloyd’s market activities
•    Entering funeral plan
•    Entering into and administering a regulated mortgage contract
•    Entering into and administering a home reversion plan
•    Entering into and administering a home purchase plan
•    Agreeing to do most of the above activities

A list of specified investments is also included on the FSA website, and this reads:

•    Deposits
•    Electronic money
•    Rights under a contract of insurance
•    Shares etc
•    Instruments creating or acknowledging indebtedness
•    Government and public securities
•    Instruments giving entitlement to investments
•    Certificates representing certain securities
•    Units in a collective investment scheme
•    Rights under a stakeholder pension scheme
•    Options
•    Futures
•    Contracts for differences
•    Lloyd’s syndicate capacity and syndicate membership
•    Rights under funeral plan contracts
•    Rights under regulated mortgage contracts
•    Rights under a home reversion plan
•    Rights under a home purchase plan
•    Rights to or interests in anything that is a specified investment listed, excluding ‘Rights under regulated mortgage contracts’.