There may be those reading this blog who have little knowledge of the FSA, and many who have perhaps no knowledge of its powers, and how it uses them.
In my last post I had to briefly explain "MCOB" and "BCOBS", many of the posts that follow contain references like that - which if you have day to day dealings with such terms they will not present any problems. However, if they are new to you, perhaps these notes will help - I am not convinced they will, but I hope so.
First, a link to the essential facts about the FSA, as presented by the FSA.
For my purposes, some in a general sense, some more specifically,these extracts are important, including the items I have highlighted:
What is the FSA?
We are the main statutory regulator for the UK financial services industry. We were established by an Act of Parliament in 2000 and formally gained our powers on 1 December 2001. We regulate some 29,000 firms, which includes EEA firms passporting into the UK, ranging from global investment banks to very small businesses, and around 165,000 individuals. This industry contributes 6.8% of UK GDP and employs over 1.1 million people, providing products and services to millions of consumers.
What is the FSA's purpose?
We were given five specific, and equal, objectives by Parliament. These are: maintaining market confidence; promoting public understanding of the financial system; contributing to the protection and enhancement of the stability of the UK financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
In practice, this means that we want to make markets work effectively to deliver benefits to firms and consumers. We operate a risk-based approach concentrating on the big risks and accepting that some failure neither can, nor should, be avoided. Potential risks are prioritised, using impact and probability analysis, and we then decide on an appropriate regulatory response – in other words, what approach we will take and how much resource we will allocate to mitigating the risk.
Who decides what the FSA regulate?
The scope of our authority was initially set out in the Financial Services and Markets Act 2000 (FSMA). Since then, Parliament has extended our responsibilities to include, for example, mortgage lending and insurance broking.
Some financial services, such as consumer credit and occupational pension schemes, are not regulated by the FSA. In addition, some businesses that may appear to be offering financial services, such as buy-to-let property clubs or compensation claim handlers, fall outside the FSA's scope.
Only Parliament currently has the authority to add to our remit.
In far more specific terms, the items to follow will make reference to various Sections of the FSMA, and how they have been applied by the FSA; they will make reference to "Principles" and to items like the "MCOB" I mentioned earlier.
For those who wish to source those references as they appear, the FSA Handbook is the place to go.
I do strongly recommend that you click on that link (take a very deep breath before doing so) because you are about to see one of THE most complicated inter-linking set of rules, principles, and requirements that can be imagined. That is why in an earlier post - I said this ain't easy.
I hope that this short explanation may help - but even providing it - ain't easy.
The FSMA gave the FSA powers. The FSA have established what is basically a "heirarchical" set of rules - some are "high level" and apply to all the firms that gain FSA authorisation to do business.
Others are best described as "activity specific" requirements, and vary in their nature between say Banks, or Investment Companies, or IFAs.
Thus working down that hierarchical structure you may see PRIN: SYSC: COND: APER: COBS: ICOBS: MCOB: BCOBS: CASS: MAR. Easy peasy - it ain't!
This might give you a taste ( a good or bad taste - I don't know):
The Full Handbook - High Level Standards
Principles for Businesses - the fundamental obligations of all firms under the regulatory system - PRIN
Senior Management Arrangements, Systems and Controls - the responsibilities of directors and senior management - SYSC
Threshold Conditions - the minimum standards for becoming and remaining authorised - COND
Statements of Principle and Code of Practice for Approved Persons - the fundamental obligations of approved persons - APER
One which will figure in the items that follow are these - Principles for Businesses - the fundamental obligations of all firms under the regulatory system. Details - in perhaps overwhelming detail - here
And if you want to gain an insight into MCOB, or BCOBS, or any of the other COBS - go here
Enough already - I am in no way sure that will help many - but that is the background against which the following posts become relevant, and will in due course play their part in establishing the link between the FSA and the question over bank charges being fair or otherwise.
They will in part lead to this:
Let's ask Lord Turner and the FSA this very simple question:
Do you believe that the charges levied by Banks on their customers were and are fair or unfair?
Yes, I know I keep repeating that - but at the end of these posts, in the conclusion of this blog - I hope I may not be the only person addressing that question to Lord Turner and the FSA.
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