8.The regulation of financial services has, historically, been the responsibility of a range of different bodies:
the Authority (formerly the Securities and Investment Board);
the Self-Regulating Organisations (“SROs”): most recently the Personal Investment Authority, the Investment Management Regulatory Organisation and the Securities and Futures Authority;
the former Supervision and Surveillance Branch of the Bank of England;
the Building Societies Commission;
the Insurance Directorate of the Treasury;
the Friendly Societies Commission; and
the Registry of Friendly Societies.
9.Following the Government’s announcement of its proposals to introduce legislation to reform the regulation of financial services in May 1997, steps were taken to transfer responsibility for regulation to the Authority. Certain functions under the Banking Act 1987 (“Banking Act”) were transferred by the Bank of England Act 1998. In other cases, the Authority entered into contracts with the relevant bodies to perform regulatory functions on their behalf. For example, the Treasury contracted with the Authority for the performance of certain functions under the Insurance Companies Act 1982 (“ICA 1982”). Many relevant staff transferred to the Authority and relocated to its headquarters building. This process of integration will be completed when the Act is brought into force.
10.The Act will broadly continue the regime for recognised investment exchanges and clearing houses under the Financial Services Act 1986 (“FS Act 1986”), although the Authority’s powers under the Act will be widened as compared with those under the predecessor legislation. The Authority will have powers to regulate the Lloyd’s insurance market, and have powers of direction over the Council of Lloyd’s, although the latter will retain its responsibilities under Lloyd’s Acts for the superintendence and governance of the Society of Lloyd’s. The recognised professional bodies regime under the FS Act 1986 will not continue. Professional firms (such as solicitors, accountants and actuaries) carrying on mainstream regulated activities will be authorised and regulated directly by the Authority. However, some categories of professional firm will benefit from an exclusion from the scope of regulation under the Act, subject to arms-length oversight by and certain powers of the Authority. The Act does not affect the professional bodies’ wider powers to regulate the professional activities of members of their respective professions.
11.The Act is intended to coordinate and modernise financial regulatory arrangements which are currently established under a number of different enactments:
the Credit Unions Act 1979
the Insurance Companies Act 1982
the Financial Services Act 1986
the Building Societies Act 1986
the Banking Act 1987
the Friendly Societies Act 1992
12.Those enactments are generally supplemented by secondary legislation or rules. It is intended that the powers conferred by section 426 will be used so that the relevant parts of that legislation, and rules and regulations made under it, will be substantially repealed when the Act comes into force. Certain other enactments will also be repealed, or substantially repealed, including the Policyholders Protection Acts 1975-97, the Industrial Assurance Acts 1923-48 and the Insurance Brokers (Registration) Act 1977.
13.The Act also provides for the transfer of the remaining functions, including for example functions relating to the registration of mutual societies, of the Building Societies Commission, the Friendly Societies Commission and the Registry of Friendly Societies.