Markets in Financial Instruments Directive and Its Implications on the Financial Services Authority

Financial Services Authority is an independent non-government body, set up under the Financial Services and Markets Act (FSMA) 2000. The important role of this authority funded by the industry is to regulate the financial services industry. The New Financial Services and Markets Act 2000 provides a framework within which the Financial Services Authority (FSA) will operate as the UK’s sole, statutory, financial services regulator. (Lindsey Hemingway 2001)
The policy objectives of FSMA 2000 are to create an efficient and effective transparent framework for financial services regulation in the UK which promoted market confidence and protects consumers. According to HM Treasury Note (2005), “these Regulations fulfill these objectives by enabling the FSA, the UK’s single regulator of financial services, to operate more effectively by permitting independent actuaries who assist the FSA in its regulatory functions to disclose more information to the FSA in certain circumstances.”
According to Lindsey Hemingway (2001), the New Act would introduce the following significant changes in the financial services law, although the fundamental principles of the Old Act will be maintained. The Organisation structure of FSA is based around three Managing Directors and a Chief Operating Officer reporting to an Executive Chairman. Each of these three directorates has a distinct area of primary interest and is each regulated institution is allocated to five supervisory divisions. Currently, independent actuaries appointed to assist the FSA in its regulatory function are restricted in what information they may disclose to the FSA. This impairs the FSA’s ability to be kept informed of facts that are relevant to its function. The revised disclosure provisions would apply the same provisions to independent actuaries as already apply to other independent persons appointed to assist the FSA in its regulatory functions. The FSA’s consultation paper 45 entitled ‘The Conduct of Business Source Book’ was published in the year 2000. COBS contains the rules and guidelines which will apply principally to firms dealing with private and intermediate customers and relates mainly to the business of the investment firms. It also contains rules and guidance of relevance to deposit takers, general insurers and certain participants to Lloyd’s market.