With the coming into force of the Financial Services and Market Act 2000 (FSMA) in December 2001, the United Kingdom entered upon a new era in financial regulation. In place of a fragmented regulatory structure where responsibilities were divided between a number of agencies, under the new regime the Financial Services Authority (FSA) is the single regulator of the financial sector. In place of self-regulation by the industry or, even, self-regulation within a statutory framework as the previous regulatory regime for the securities industry was conventionally described, financial regulation has been put onto a clear statutory footing. The FSA has an impressive armoury of statutory powers at its disposal.
These dramatic regulatory changes in the United Kingdom were made in response to developments in financial markets and the failure of the previous regime to keep pace. Well-publicised scandals during the 1980s and 1990s such as the mis-selling of pensions and life assurance products and the collapse of individual financial firms like Barings indicated that the old regime was failing to meet the regulatory goals of protecting the interests of consumers, preventing fraud and maintaining public confidence in the financial sector. This in turn triggered political pressure for reform.
When the Financial Services Act 1986 and the Banking Act 1987 were enacted, many of the features that characterise modern financial services business in developed markets such as the United Kingdom were already appearing.