The new regulatory order: institutional change at UK, EU and international level

Demise of FSA and Banking Commission established

The UK government has finally announced its radical reforms for the domestic regulatory system. FSA will be effectively abolished and the model of a unitary (one stop shop) regulator/supervisor abandoned in favour of a twin peaks structure, i.e. one where financial institutions are each supervised by two separate regulators - a Prudential Regulatory Authority (the PRA) and a Consumer Protection and Markets Authority (the CPMA).

Click here for an analysis of the reform proposals, including what this will mean for regulated firms.

In July 2010 the Government published an initial "high-level" consultation. Click here to view our chart of the new UK regulatory framework, as proposed in the consultation 'A new approach to financial regulation: judgment, focus and stability'. Click here to read the consultation document; here to read our highlighted summary and here for our analysis. Click here to view our chart of the current system. This chart shows UK, EU and international institutions.  Click here to view our detailed dissection of the jurisdiction and mechanism of the PRA and CPMA.

Click here to view our chart of the proposed new regulatory system. This chart shows proposed changes at UK and EU level.

Click here for the pack from our recent seminar "Insurance regulation during the demise of FSA".

Institutional reform has been a major political issue in the UK. Our report ‘Clear blue water between the Conservatives’ plans to scrap FSA and Labour’s plans to maintain and improve the existing regime’ sets out many of the issues surrounding institutional reform in the run up to the 2010 election. The new government’s proposals essentially implement the Conservatives' pre-election plan. Many of the questions left unanswered in the plan will now need to be resolved. Click here for a chart of the Conservative Party's original plans for institutional reform in the UK.


The new European System of Financial Supervision

At European level there will be a new institutional structure for regulation, which will consist of a European Systemic Risk Board (ESRB) and a new European System of Financial Supervision (ESFS). The ESFS will comprise of a college of national supervisors and three European Supervisory Authorities (ESAs) for banking, insurance and occupational pensions, and securities and markets. These will be considerably more powerful than the current level 3 committees (CEBS, CESR and CEIOPS).

Click here for an overview of the proposed new European regulatory system or see the charts above for a diagrammatic representation of the proposed changes.

New global standards but no global regulator

International authorities have ruled out establishing a global regulatory body but intend to use existing bodies to encourage tighter, more uniform regulatory standards across domestic authorities and to boost international co-operation to resolve cross-border issues.

Click here for more information on the harmonisation of global regulatory standards.


If you would like to look at the topic in more detail, follow the sequence of developments or read the underlying publications, click here to access our daily monitoring reports on this subject - starting with the most recent; each report contains a summary and a hyperlink to the publication concerned.


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