An unhappy coupling

Three weeks after its election victory, the new Labour government announced in May 1997 that work would begin on the reform of the Financial Services Act 1986. The government sought to implement a new financial regulatory regime which would set basic standards and prevent systematic failure. The proposals were contained in the Financial Services and Markets Bill 1998, which contained three important features:

·                                   

●     The creation of a single financial regulatory authority, which would have a clearly defined set of statutory objectives, functions and powers;

·                                   

●     the historic role of the Bank of England was to be revised; and

·                                   

●     the principle of self-regulation was to be abandoned.

The Financial Services and Markets Act 2000 (FSMA 2000) provided a single statutory framework for the Financial Services Authority (FSA). Under the Act, the FSA regulates and authorises members of the regulated sector