The Financial Services and Markets Act 2000 was introduced to maintain market confidence in the UK's financial system and is therefore a key compliance component in the smooth operation of financial systems...
Measures included the creation of a single statutory regulator - the Financial Services Authority (FSA), and the Financial Services Compensation Scheme and the Ombudsman Scheme. The FSA was given responsibility for tackling market abuse, promoting public understanding of the financial sector and reducing financial crime.
The Financial Services and Markets Act 2000 (FSMA) makes provision about the regulation of financial services and markets; and provides for the transfer of certain statutory functions relating to building societies, friendly societies, industrial and provident societies and certain other mutual societies.
The Financial Services and Markets Act 2000 therefore provides the framework in which all forms of financial services business, including insurance companies, Lloyd’s, banks, building societies, friendly and mutual societies, credit unions, investment and pensions advisers, stockbrokers, investment services firms, fund managers, derivative traders, and so on, are authorised and regulated.
Key objectives: Financial Services and Markets Act 2000
- Maintaining market confidence in the UK financial system.
- Contributing to the protection and enhancement of the stability of the UK financial system, while having regard to:
- the economic and fiscal consequences for the UK of instability of the UK financial system;
- the effects (if any) on the growth of the UK economy of anything done for the purpose of meeting that objective; and
- the impact (if any) on the stability of the UK financial system of events or circumstances outside the UK.
- Securing the appropriate degree of protection for consumers, while having regard to:
- the differing degrees of risk involved in different kinds of investment or transaction;
- the differing degrees of expertise and experience of consumers; information provided to the FSA by the Consumer Financial Education Body;
- the needs that consumers may have for advice and accurate information; and
- the general principle that consumers should take responsibility for their decisions.
- Reducing the extent to which it is possible for a regulated business to be used for a purpose connected with financial crime, such as money laundering, fraud and insider dealing.
FSMA applies these objectives directly to FSA's general functions of making rules, general guidance and policy and our function of preparing and issuing codes. In carrying out these functions, FSMA requires the FSA to have regard to a number of matters, which FSA refer to as ‘principles of good regulation’. These are:
- the need to use our resources in the most efficient and economic way;
- recognising the responsibilities of regulated firms' own management;
- the principle that the burdens and restrictions imposed by regulation should be proportionate to the benefits;
- the international character of financial services and the desirability of maintaining the UK's competitive position;
- the desirability of facilitating innovation;
- the desirability of facilitating competition between those subject to regulation;
- the need to minimise the adverse effects of regulation on competition; and
- the desirability of enhancing the understanding and knowledge of members of the public of financial matters (including the UK financial system).