Bringing this important piece of legislation into being is proving to be a complicated process. Below are some details gleaned from HM Treasury Bulletins.
When the Financial Services and Markets Act 2000 is brought fully into force later this year, the legislation which forms the statutory framework for the current regulatory regime will be repealed. The principal enactments which will be repealed or revoked are:
There are hundreds of references, in other current legislation, to those enactments, which must all be amended under FSMA.
Treasury Bulletin No. 9 explains: "The Order making all the necessary consequential amendments is currently being written. The consequential amendments do not change the effect or application of the provisions amended, unless a limited change is inevitable as a direct consequence of the changes in the regulatory framework made by FSMA itself". I am sure you understand, though I am not sure I do. The Treasury Minister, Ruth Kelly, announced in the House of Commons on the 12th July that the date, known as "N2", on which the main provisions of the Financial Services and Markets Act 2000 (FSMA) will come into force is to be Saturday 1 December. From that date regulation of financial services will be by a single statutory regulator, the Financial Services Authority (FSA), operating under a single body of law. She suggested that this would bring substantial benefits to financial services firms and consumers.
An amazing number of transitional issues arise from the replacement by FSMA of existing regulatory frameworks. For instance the Government has made or expects to make transitional orders covering the following:
and a significant number of other issues.
Of course a large number of firms are already authorised to carry on financial services under existing legislation and a small number of firms and individuals will require authorisation for the first time at N2 (or 1 January 2002 for prepaid funeral plans). The Government says that it will seek to minimise the disruption arising from the introduction of the new framework for financial services regulation, while maintaining the appropriate degree of consumer protection.
Transitional Provisions
At the end of July the Financial Services and Markets Act 2000 (Transitional Provisions) (Authorised Persons etc.) Order 2001 was laid before Parliament. This Order provides, in summary, that if a firm is authorised by one of the existing financial services regulators that firm is, from N2, to have equivalent authorisation under FSMA.
The Order is couched in somewhat impenetrable language but, as I understand it, it generally requires the FSA to use its best endeavours to issue these authorisations by N2, but where it is unable to do so, firms which have made applications for authorisation before N2 for activities currently carried on lawfully will have, where appropriate, interim authorisation under FSMA until the application has been determined.
In October legislation was put in place (the Interim Permissions Order (SI 2001/ 3374) establishing the right to interim authorisation.
back to menu
Click Logo to Return to
Main Magazine Index