Memorandum by the Financial Services Authority
(LAI 24)
This note is submitted in response to the Committee's
request for information on the FSA's Register of regulated firms.
Before turning to that particular issue, we provide some background
on the FSA and its responsibilities.
THE RESPONSIBILITIES
OF THE
FINANCIAL SERVICES
AUTHORITY
1. The Financial Services Authority (FSA)
is an independent non-governmental body, given statutory powers
by the Financial Services and Markets Act 2000 (FSMA). The
FSA is accountable to Treasury Ministers and through them to Parliament.
We are operationally independent of Government and are funded
entirely by the firms we regulate.
2. FSMA gives us four statutory objectives:
— maintaining confidence in the financial
system;
— promoting public understanding of the
financial system;
— securing the appropriate degree of protection
for consumers, taking into account the general principle that
consumers should take responsibility for their decisions; and
— reducing the extent to which it is possible
for a business to be used for a purpose connected with financial
crime.
3. We regulate most types of financial services
firms, including banks, building societies, credit unions, insurance
companies, financial advisers, stockbrokers, mortgage and insurance
brokers. We also work in partnership with other regulators and
authorities—for example, to tackle financial crime. We do
not regulate consumer credit, including credit cards, second-charge
loans and occupational pension schemes.
THE FSA REGISTER
4. The FSA Register is a public record of
financial services firms, individuals and other bodies which fall
under our regulatory jurisdiction as defined in the Financial
Services & Markets Act 2000 (FSMA). Firms are regulated
by the FSA as long as they continue to meet threshold conditions,
which include having adequate capital.
5. Section 347 of FSMA sets out what the
FSA must include on the Register of regulated firms (for example,
the name of the firm, the regulated services the firm holds itself
out as able to provide, a suitable business address for the firm
and the name of any approved persons carrying out controlled functions
in the firm). Section 347 also requires us to include other information
that we deem appropriate for the public record. Under this heading
we include, for example, any publicly available disciplinary history
of a firm or individual and the regulatory history of a firm or
individual for the benefit of consumers and market participants.
6. The FSA Register has information on all
authorised firms currently doing business in the UK. The Register
includes firms that are UK-authorised as well as those authorised
in another European Economic Area (EEA) state that also conduct
business in the UK, using the passporting rights available to
them under EC legislation.
7. On the front page of the Register, we
advise UK consumers, firms and other organisations who are considering,
or who are currently, doing business with a firm authorised in
another EEA state to ask for further information from the firm
or its UK branch about its complaints and compensation arrangements.
This is because the position may differ compared to a UK-authorised
firm.
8. It is for investors to make their own
judgments when choosing to invest money in an FSA regulated firm.
LOCAL AUTHORITIES
AND THE
FSA
9. Local authorities, in common with other
organisations, are able to check whether an institution in which
they are considering investing is an authorised deposit taker,
by checking on the FSA Register. They do not have to contact the
FSA to check the Register, as it is accessible from our website.
We do not require local authorities, or any other user, to inform
us when they perform searches on the Register.
10. We do not regulate the financial investments
of local authorities and we expect local authorities to make their
own judgements and investment decisions, taking professional advice
as appropriate. The FSA does not provide specialist financial
advice to firms, consumers or other market players such as local
authorities. Generic financial advice is available on our consumer
website, but this is designed specifically for individual consumers.
DECEMBER
2008
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