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Financial Services Act 2012 2012-13

Royal Assent

(This Bill is from a previous session)

Summary

  • Bill status:

    Bill is now an Act

  • Type of Bill:

    Government Bill

Sponsors:

Last event

  • Royal Assent Royal Assent

    19 Dec 2012

    The Bill was given Royal Assent, and becomes the Financial Services Act 2012.

Summary

The Bill was announced in the Queen's speech on 25 May 2010, and a draft Bill and the white paper 'A new approach to financial regulation: the blueprint for reform' were published on 16 June 2011. The Bill was introduced to Parliament on 26 January 2012.

The Bill aims to help manage economic risk by transferring control of macro-prudential regulation and oversight of micro-prudential regulation to the Bank of England.

The Bill allows for:

  • the establishment of a Financial Policy Committee (FPC) within the Bank of England, which will be responsible for macro-prudential regulation - this body will monitor risks to the overall economy
  • the establishment of a Prudential Regulation Authority (PRA) as a subsidiary of the Bank of England, which will have oversight of micro-prudential regulation - this body will make judgements on the soundness of individual firms
  • the establishment of a Financial Conduct Authority (FCA) to regulate the conduct of business across financial services and markets - this body will make judgements on risks to consumer protection and competition
  • the abolition of the Financial Services Authority (FSA)

A joint committee formed to scrutinise the Bill reported in December 2011, recommending that greater Parliamentary and governmental oversight be applied to the Bank of England.

The coalition government believes that that a major cause of the impact the 2007 financial crisis had on the UK was poor regulation of the financial services industry. In its view, the FSA became too focussed on superficial targets, with neither the Bank of England nor the Treasury being made responsible for overall oversight of the financial system. The Bill is the culmination of the work the government has done to correct these perceived problems since it was elected in May 2010.

Labour disputes the government's view of the causes of the financial crisis, but acknowledges the need for regulatory reform. In its 2010 election manifesto, the party pledged to introduce a single regulator for consumer finance, and to pass supervision of all unsecured lending to the FSA.

The Financial Services Bill was the subject of a carry-over motion on 6 February 2012, which was agreed without division.