Chapter 4.pdf - Chapter 4 Financial services and markets...

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Chapter 4 Financial services and markets act 2000 - Objective was to bring together the regulation of all sectors of the UK financial services industry - One regulator = FSA - One ombudsman = FOS - One compensation scheme = FSCS Financial services act 2012 - FSA was disbanded, regulation being split between: o Financial Policy Committee Committee within BoE responsible for watching emerging risks to financial system + providing strategic direction o Prudential Regulation Authority Responsible for stability of important financial institutions such as banks, building societies and insurers Ensure that firms can fail without bringing down the entire financial system. o FCA Responsible for conduct of business/market issues for all firms. Focused on taking action early before consumer detriment occurs UK financial authorities - HM Treasury, BoE, Financial Policy Committee, FCA are the UK’s financial authorities. They work together to ensure the smooth & effective running of the UK’s economy. HM Treasury - Responsible for creating/putting into effect UK government’s financial/economic policy. - Aim is to raise the rate of sustainable growth/create economic and employment opportunities for all - Main things they look out for: o Economic disruption that would arise from financial instability o Links with wider government policy o Consideration of whether changes in law would be appropriate Bank of England - UK’s central bank - Responsibilities: o Settling of payments o Functioning of UK Markets o Provision of routine and emergency liquidity to the banking system - Two core purposes: o Monetary Stability Stable prices and confidence in the currency. o Financial stability
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Detecting and reducing threats to the financial system as a whole Financial Policy Committee (FPC) - Identifies, monitors and takes action to remove/reduce systematic risks to protect/enhance the UK financial system Prudential Regulation Authority (PRA) - Responsible for regulation/supervision of banks, building societies, credit unions, insurers and major investment firms.
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