UK : Royal Assent for Financial Services Act 2010

The Financial Services Act 2010 received Royal Assent today, resulting in a number of changes to the Financial Services Authority’s (FSA) objectives, powers and duties.

The main changes:

• Financial stability: The new financial stability objective for the FSA includes a duty for the FSA to determine and review its financial stability strategy, in consultation with the Treasury;
• Consumer education: The FSA is also required to establish a new consumer financial education body. When this body is fully operational, it will assume the FSA’s current responsibilities in relation to financial education.
• Enforcement powers: Notable changes here include the power to suspend individuals, and firms, along with the ability to fine those who are carrying out a role that needs FSA approval without the necessary approval being in place. The time limit to issue a warning notice against an individual increases from two years to three years from the time the FSA first becomes aware of the misconduct;
• Remuneration: The FSA will have the power to specify that remuneration agreements in breach of its remuneration rules are void;
• Consumer redress scheme: This clause would give the FSA the power to impose a consumer redress scheme. It will come into effect only by order of the Treasury.

Some of the new powers require the FSA to make rules, or publish statements of policy. The FSA will publish a consultation paper in due course concerning implementation of the provisions in the Act.

The changes announced today in the Financial Services Act 2010 were anticipated in the FSA's Business Plan for 2010/11, published in March, and the FSA will continue to execute these business priorities.