2. What are the main sources of regulatory laws in your jurisdiction? | United Kingdom | Global Financial Services Regulatory Guide | Baker McKenzie Resource Hub (2024)

The regulation of financial services in the UK is governed by the Financial Services and Markets Act 2000 (FSMA). FSMA is the main framework law in the UK for the banking, financial services and insurance industries, and regulates the carrying on of certain activities that are in the nature of financial services. There are two fundamental restrictions that apply:

  1. the general prohibition on carrying out regulated activities in the UK
  2. the restriction on issuing financial promotions which are capable of having an effect in the UK

General Prohibition: section 19 FSMA prohibits a person from carrying on a "regulated activity" in the UK, or purporting to do so, unless the person is an authorized person (i.e., they hold permission to carry out particular regulated activities by the PRA or the FCA) or an exempt person, or they can rely on an exclusion. The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) sets out an exhaustive list of regulated activities that give rise to a licensing obligation under FSMA (unless an exclusion applies). Persons who carry on "regulated activities" on a cross-border basis from outside the UK may also be deemed to be carrying on regulated activities in the UK in certain circ*mstances.

Financial Promotion Restriction: section 21 FSMA prohibits a person from communicating, in the course of business, an invitation or inducement to engage in investment activity, unless they are an authorized person, an exclusion applies, or the communication has been approved by an authorized person. This restriction covers advertising and marketing activities. In the case of a communication originating outside of the UK; however, the restriction only applies if the communication is capable of having an effect in the UK. The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (FPO) sets out exemptions to the financial promotion restriction.

These restrictions apply separately to one another: it is possible that a particular activity is not considered to be carrying on a regulated activity in the UK (or is exempt from regulation), but sending communications to customers in relation to that activity may still be a breach of the financial promotion restriction. A breach of either of these restrictions is a criminal offense and may result in certain agreements being unenforceable. Persons who suffer loss as a result of an unauthorized person breaching either of the above restrictions may also have an action against the unauthorized person to make good that loss.

There are two other notable authorization regimes for financial services in the UK. The Payment Services Regulations 2017 (PSRs) govern the authorization and prudential requirements applying to payment services. The regulatory regime applying to electronic money (e-money) institutions is set out in the Electronic Money Regulations 2011 (EMRs) and parts of the PSRs.

Both the FCA and the PRA issue rules and guidance, which apply to the firms that they regulate. These rules and guidance are applicable primarily to UK-regulated or -supervised firms but are also relevant in certain respects to non-UK firms. For UK-regulated firms, the rules and guidance contained in the FCA Handbook (and PRA Rulebook, if applicable) form the bedrock of their legal and regulatory obligations.

Much of the current regulatory requirements in the UK are derived from European Union directives and regulations that applied in the UK prior to Brexit and were "onshored" at the end of the Brexit transition period. This onshored body of legislation and technical standards has been amended to correct deficiencies as a result of Brexit (for example, by substituting references to EU bodies for UK ones or limiting territorial scope). However, the UK has signaled its intent to consider future divergence from the EU financial services regulatory framework where divergence might be best for UK consumers and markets, and at the time of writing HM Treasury is undertaking a number of consultations relating to the future direction of financial services in the UK.

2. What are the main sources of regulatory laws in your jurisdiction? | United Kingdom | Global Financial Services Regulatory Guide | Baker McKenzie Resource Hub (2024)


What are the sources of regulatory framework? ›

The sources of regulation include both domestic/national laws (laws that apply to activities within the jurisdiction of a sovereign nation) and international laws (agreements between sovereign nations).

Who are the main banking and financial regulators in the US? ›

The federal regulators are: The Office of the Comptroller of the Currency (OCC) The Federal Reserve System. The FDIC.

What is the regulatory framework for banks in the UK? ›

There are two key regulators in the UK. The Prudential Regulation Authority (“PRA”) is responsible for the financial safety and soundness of banks, whilst the Financial Conduct Authority (“FCA”) is responsible for how banks treat their clients and behave in financial markets.

What is the source of law regulations? ›

The four sources of federal and state law are (1) constitutions, (2) statutes and ordinances, (3) rules and regulations, and (4) case law.

What is a regulatory source? ›

There are two important sources for regulatory research: The Federal Register and the Code of Federal Regulations. The Federal Register is a chronological publication that contains all proposed, interim, and final rules from federal agencies. The official version of the Federal Register is published in print.

What is the difference between FCA and Prudential Regulation Authority? ›

Whereas the PRA is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms, the FCA is responsible for the prudential regulation of those financial services firms not supervised by the PRA such as asset managers and independent financial ...

Who is responsible for the regulation of the financial services market in the UK? ›

The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. Its role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers.

How does the FCA regulate? ›

Financial services providers must be authorised or registered by the FCA before they offer 'regulated activities'. The first step in authorisation requires applicants to submit their business plans, risks and controls, qualifications and experience. These details are then analysed by the FCA and they make a decision.

Who are the four main regulators of the finance sector? ›

The regulatory agencies primarily responsible for supervising the internal operations of commercial banks and administering the state and federal banking laws applicable to commercial banks in the United States include the Federal Reserve System, the Office of the Comptroller of the Currency (OCC), the FDIC and the ...

Who are the global regulators? ›

International members include the Bank for International Settlements; the European Central Bank; the European Commission; the International Monetary Fund (IMF); Organization for Economic Co-operation and Development; and The World Bank.

Who is the regulatory authority for UK banks? ›

In the UK, two regulators are primarily responsible for the authorization and supervision of financial institutions: the Prudential Regulation Authority (PRA) (part of the Bank of England) and the Financial Conduct Authority (FCA).

How does the Bank of England regulate banks? ›

Through regulation, the Bank sets out rules, and develops standards and policies that set out what we require and expect of PRA-authorised firms, financial market infrastructures ('FMIs') and those involved in their management.

What is the regulatory framework for open banking in the UK? ›

Open banking is regulated in the UK by the Financial Conduct Authority (FCA), using these PSRs. PSD2 and the resulting PSRs gave customers the right to ask third party providers to: make payments on their behalf (Payment Initiation Services or PIS) access their financial data (Account Information Services or AIS)

What are regulatory frameworks? ›

Regulatory frameworks are legal mechanisms that exist on national and international levels. They can be mandatory and coercive (national laws and regulations, contractual obligations) or voluntary (integrity pacts, codes of conduct, arms control agreements).

What are the sources of regulatory intelligence? ›

Definition: Regulatory Intelligence

This includes gathering and analyzing regulatory information from various sources, including regulatory agencies, industry associations, and scientific literature.

What are the 3 regulatory systems found in the body? ›

There are three main control systems in the body: the nervous system, the endocrine system, and the immune system. Each of these systems plays a crucial role in regulating different functions of the body. The Nervous System : The nervous system is the body's primary control system.


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