Defining the Financial Services Authority
Every country that has a banking and finance system needs some
sort of entity to regulate it... after all, simply allowing
banks and financial companies to run independently without any
sort of system of checks and balances would almost certainly
lead to corruption and disaster. In the UK , the regulatory
entity of the financial system is the Financial Services
Authority, or the FSA, and is operated independently of the
government in an effort to offer a non-governmental control of
the financial industry.
History of the FSA
The Financial Services Authority came into being as a result of
the Financial Services and Markets Act of 2000. The first step
in the creation of this act was the merger of banking
supervision and investment services regulation into an
organization known as the Securities and Investment Board, or
SIB, in 1997. In October of 1997, the SIB formally changed its
name to the Financial Services Authority, and the responsibility
for banking supervision was transferred to the FSA from the Bank
of England a year later. In May of 2000, the FSA took over the
role of the UK listings authority from the London Stock
Exchange.
When the Financial Services and Markets Act went into effect in
2001, several other financial services were merged into the FSA
and additional responsibilities were granted to the organization
(such as the ability to take action to prevent market abuse.) In
2004, the FSA was granted the abilities of mortgage regulation
following a decision by the Treasury, and in January of 2005 the
FSA took over regulation of the general insurance business to
implement the Insurance Mediation Directive.
What the FSA Does
In short, the Financial Services Authority is in charge of
monitoring and regulating all of the financial transactions and
stock market exchanges within the UK . They also maintain
websites that detail how individuals and businesses within the
UK can improve their financial capability, as well as upholding
the rules of trade in regards to finances and securities when
dealing with other countries or political unions. The FSA is
also in charge of monitoring securities exchanges within the UK
, and taking steps to actively avoid market fraud and illegal
trade.
How the FSA Operates
The Financial Services Authority is an open company, limited by
guarantee and financed by the financial services industry
itself. The FSA is run by the FSA Board, which consists of a
Chairman, the Chief Executive Officer, three Managing Directors,
and ten Non-Executive Directors, one of whom serves as the
Deputy Chairman who is the lead non-executive member. Overall
policy is decided upon and set by the Board as a whole, though
day-to-day operations and staff management is performed by the
CEO.
FSA Board Accountability
The FSA Board is appointed by the Treasury, and though it is not
a government agency in and of itself it is accountable for its
actions to the government and must report to the Ministers of
the Treasury. Because of this, great care is taken in the
choosing of new Board members should one retire of leave the
Board.
Due to the nature of the FSA and the influence that it has upon
the economy of the UK, the Board is also accountable to
Parliament through its dealings with the Treasury, and any
indiscretions on the part of Board members will be dealt with
accordingly either by the rest of the Board, the Ministry of the
Treasury, or Parliament itself.
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