In June 2010, the Chancellor of the Exchequer announced radical reforms to the Financial Services Authority (“FSA”) as part of the coalition Government’s response to perceived flaws in regulation that were exposed by the credit crunch. The new regulatory regime is still under consultation and draft legislation is expected in Spring 2011. However, the Treasury’s consultation paper, ‘A New Approach to Financial Regulation: building a stronger system’ (Cm 8012), published in February 2011, confirms that the FSA will be abolished during 2012 and replaced by three new entities:
- the Financial Policy Committee (“FPC”), a high level body focused on macro‐economic and systemic issues (i.e. the resilience of the financial system as a whole);
- the Prudential Regulatory Authority (“PRA”), which will regulate micro‐economic (i.e. firm‐specific) prudential or ‘balance‐sheet’ risks; and
- the Financial Conduct Authority (“FCA”), previously known under its working title the Consumer Protection and Markets Authority, which will regulate conduct of business issues for all firms and will also have a limited prudential regulation role for those firms which are not also subject to the PRA.
The e‐payments industry is already undergoing regulatory changes with the imminent introduction of the remaining provisions of the new E‐Money Regulations on 30 April 2011. This article discusses the current proposals for FSA reform and highlights some possible issues for the e‐payments industry.
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