IFAct News Changes in the Regulatory Architecture and Approved Persons
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| Regulatory Architecture changes: You should learn in April 2011 whether you are going to fall under the regulation of the Prudential Regulatory Authority (PRA) or the Consumer Protection and Markets Authority (CPMA). |
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Changes in the Regulatory Architecture and Approved Persons
Regulatory Architecture changes: You should learn in April 2011 whether you are going to fall under the regulation of the Prudential Regulatory Authority (PRA) or the Consumer Protection and Markets Authority (CPMA).The FSA is being replaced by what is known as “twin peaks” regulation. That is separate prudential and conduct regulation. Under the Bank of England will be the PRA which will be the prudential regulator for banks, building societies, insurers, friendly societies, investment banks, Lloyd’s of London and its managing agents it is believed this will be approximately 2,200 firms. The CEO of the PRA will be the current CEO of the FSA, Hector Sants.
The current proposed statutory objective of the PRA will be: to promote the stable and prudent operation of the financial system through the regulation of individual financial firms in a way which minimises the disruption caused when they fail.
The PRA is developing a new risk model to enable it to fulfil this objective.
All other currently FSA regulated firms will be regulated for conduct of business and fulfilment of their prudential responsibilities by the CPMA. The CPMA will also be responsible for the conduct regulation of the PRA regulated firms. Martin Wheatley, currently the head financial regulator in Hong Kong will be the CPMA CEO but he does not take office until 1st September 2011.
It is understood the primary objective of the CPMA will be: to ensure confidence in financial services and markets, with specific focus on protecting consumers and ensuring market integrity.
Although the legislation and formal changes will not occur until 2012, the FSA intends to operate with mirror divisions reflecting the intended changes in the Spring of 2011 with a Prudential Business Unit and a Consumer and Markets Business Unit.
Approved Person Changes:
- There are to be six new governing Significant Influence Function Controlled Functions, and
- Three new systems and controls functions
By May 1st 2011 regulated firms have to consider who is affected and be ready to notify the FSA of who will take on which roles during the transition period.
This is an important part of the fulfilment of the FSA’s new intrusive approach to supervision and there needs to be careful consideration of the requirements.
If IFAct can assist with any of the requirements resulting from these changes please do not hesitate to contact by either telephoning 08456 121211 or completing the enquiry form on this website.