Introduction and Overview

Abstract

The Financial Services & Markets Act¹ (FSMA) has significantly extended the responsibilities of the Financial Services Authority (FSA) in the markets area. A central feature of the new Act is Parliament’s establishment of four statutory objectives for the FSA. These have varying degrees of relevance to the orderliness and efficiency of markets but, potentially, broaden considerably the FSA’s existing responsibility in this area, namely to ensure the ‘orderly control of business’ on RIEs. The four statutory objectives are as follows:²

• 1 Maintaining confidence in the UK financial system³ The financial system includes financial markets and exchanges, regulated activities and other activities connected with financial markets and exchanges (FSMA, section 3).

• 2 Promoting public understanding of the financial system This includes promoting awareness of the benefits and risks associated with different kinds of investment or other financial dealing, and the provision of appropriate information and advice (FSMA, section 4).

• 3 Securing the appropriate degree of protection for consumers The FSA must have regard to the differing degrees of risk involved in different kinds of investment or other transactions, the differing degrees of experience and expertise that different consumers may have in relation to different kinds of regulatory activity, the needs that consumers may have for advice and accurate information and the general principle that consumers should take responsibility for their actions (FSMA, section 5).