Review of the Financial Services and Markets Act 2000

The scope of a review of the Financial Services and Markets Act 2000 (FSMA) after its first two years of operation was announced by Financial Secretary Ruth Kelly today.

The key components of the review are that the:

Office of Fair Trading (OFT) will carry out an assessment of the impact of FSMA on competition in financial services.
Financial Services Authority (FSA) will examine ways to reduce the costs of compliance by making its Handbook of rules and its guidance more accessible. It aims to streamline the consultation process, and improve cost-benefit analyses and the effectiveness of consumer education.
FSA and Financial Ombudsman Service (FOS) will consult jointly on when regulatory action by the FSA should replace decisions on individual cases by the Ombudsman and on the possibility of appeals of FOS decisions. The DTI will consult with relevant trade and consumer bodies on whether the FOS should be the mechanism for resolving disputes about consumer credit.
Treasury will propose changes to the boundary of regulation, particularly with regard to capital raising from investors and, where possible, financial advice.

It is expected that the whole review will take around one year to complete.

Announcing the review, Ruth Kelly said:

“The UK was the first country with a large financial services industry to set up a single regulator for the whole industry. The regulatory framework established has been a resounding success that has proved to be a model that other countries have followed.

“The review will consider particular components of the existing framework to see if any changes should be made. Whilst there is no intention to change the structure established by FSMA, the Government will consult publicly on any proposals for legislative change.”

NOTES FOR EDITORS

1. Financial Secretary Ruth Kelly’s written Parliamentary statement can be found on this website.

2. Don Cruickshank’s report ‘Competition in UK Banking’ was published March 2000. The Government responded in August 2000 (HMT press notice 98/00) and committed to review the impact of FSMA on competition in financial services in response to a recommendation in the Cruickshank Report. The Treasury contribution to the review will also cover other commitments given in response to Cruickshank recommendations.

3. The Financial Services and Markets Act 2000 came into effect at midnight on 30 November 2001.

4. Media enquiries should be addressed to Simon Moyse at the Treasury press office on 020 7270 4420.

5. Non-media enquiries should be addressed to the Treasury Public Enquiry Unit on 020 7270 4558.

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