The Financial Services Authority
When the FSA came into being it was envisaged as the U.K.'s sole integrated financial regulator assuming a responsibility previously held by the bank of England.
The objectives of the FSA are defined by the Financial Services and Markets Act 2000 (FSMA). They include fighting financial crime, maintaining market confidence and protecting consumers.
The FSA has wide-ranging powers to investigate all manner of misconduct within the financial services arena ranging from the mis-selling of pensions through insider share trading to regulation and disciplinary matters relating to those “approved persons” or authorised firms.
The FSA has investigation and enforcement powers to bring criminal prosecutions in cases of insider dealing, and market abuse (link) i.e. misleading statements and practices which undermine confidence in the market. Insider dealing cases are often prosecuted by the SFO but more recently many have been bought using the FSA's powers under the FSMA.
The FSA also has wide-ranging investigatory powers the FSMA sections 167 and 168, which provide for the compulsory interviews of suspects, where limited use can be made of any answers given in any criminal proceedings. (link)
In a speech to the British bankers Association on 19 November 2009 Margaret Cole, director of the enforcement and financial crime division indicated that the FSA was intent on taking much tougher action in market abuse cases in future (link) and there has been a marked increase in prosecutions and FSA regulatory interventions subsequently (link).
The FSA can also investigate a variety of different criminal offences often relating to a “perimeter breach” i.e. where an un-authorised person has carried out a regulated activity; market rigging, insider share dealing, together with numerous other offences including cases of misleading or obstructing an FSA investigation.
The FSA can also bring disciplinary proceedings against authorised persons or permitted firms for regulatory breaches and for the mis-selling of financial products.
The FSA has been severely criticised for its performance as the market regulator prior to the financial crash of 2008. In response to concerns that the FSA has devoted too much of its resources to business issues rather than investor protection before 2008, the government announced sweeping reforms to the system of financial market supervision after the 2010 election.
The FSA will be replaced by the Financial Conduct Authority and Prudential Regulation Authority in 2013. Both agencies are to be supervised by the Bank of England. The Financial Services Bill currently undergoing parliamentary scrutiny is expected to receive Royal Assent by the end of 2013.
For the latest update on the work of the SFO visit Fraud Focus, our companion site for financial crime news and analysis.