In an earlier paper (Briault, 1999) I put forward the case for a single national financial services regulator. Such a regulator, covering a broad range of financial services activities and spanning both prudential and conduct of business regulation, should be well placed to deliver effective, efficient and properly differentiated regulation in the current financial environment in the UK. That paper described the formation of the UK Financial Services Authority (FSA) and similar developments in other countries. It also discussed the factors which supported the creation of an integrated financial services regulator and commented on the relationship between a single regulator and a central bank.So why revisit this case now? The purpose of this paper 1 is not simply to repeat the arguments set out in the earlier paper, but to review developments over the last three and a half years in the UK in an attempt to measure the performance of the FSA against the rationale for creating it in the first place. The FSA has gained some useful experience over this period from which to begin to draw some tentative conclusions about the success or otherwise of a single financial services regulator in the UK, even if these conclusions must be subject to qualifications at this stage. And although the FSA has been acting in most respects as a single regulator for the last three and a half years (see Briault, 1999, page 7), it only came fully into existence at midnight on 30 November 2001, when the Financial Services and Markets Act 2000 (FSMA) came into force. The quot;alphabet soupquot; of the previous regulatory bodies, as Michael Taylor once described them (Taylor, 1995, page 7), has finally disappeared.

The single statutory regulator for financial services which is being established in the UK (the Financial Services Authority, quot;FSAquot;) will be the broadest financial regulator in the world, combining prudential, conduct of business and market conduct regulation across the full range of financial services, including banking, securities, investment management and insurance. A few other countries already have single financial services regulators, but the FSA will be the first in a major international financial centre.This paper considers the rationale for establishing a single national financial services regulator. The institutional structure of financial services regulation is important because of the impact of the efficiency and effectiveness of this regulation on the direct and indirect costs of regulation and on the success of regulation in meeting its statutory objectives. To what extent should the structure of financial regulation be driven by the functions which financial services firms undertake, reflecting market developments in the financial services industry? Is there a first-best institutional arrangement which is independent of these market developments, arising perhaps from economies of scale and scope in undertaking financial regulation, or from some underlying logic linking the structure of regulation with the objectives of regulation or with the institutional arrangements for monetary policy and for addressing systemic risk? Are there also implications here for the structure of regulation internationally, not just within national borders?Although the structure of financial regulation must depend in part on what is being regulated and why it is being regulated, this paper takes as given the rationale for financial services regulation as set out in Davies (1998a), Goodhart et al (1998) and Llewellyn (1999). This is not to deny the crucial importance of determining the rationale for intervention - and indeed the key interrelationships between this rationale and the choice of the tools of supervision - but this is too large a subject to cover within this paper.

Theory suggests that the primary role of financial institutions and capital markets is to facilitate the allocation of resources in an uncertain environment across space and time.Therefore regulation of the financial sector has a crucial role to play, especially in the development of third world countries, most of whom have enormous wealth disparities between sections of their populace. A key objective of regulation is to redress information asymmetries that sometimes exist in financial services businesses usually to the disfavour of the consumer. Although most often the regulator is also the supervisor, the role of the regulator and that of the supervisor are. In most jurisdictions however, the powers to regulate and to supervise the activities of the financial services sector reside in the same institution. The regulatory framework of financial services often comprises primary regulation, secondary legislation and guidance and (policy) directives and directions issued by the regulator. This paper looks at the rationale for regulation, the different models of regulation in the financial services and what they are aimed to achieve. The paper also looks at the broad objectives of regulation even in the absence of a unified theory of financial service regulation, such as investor protection, ensuring fairness, reducing contagion, protection against malpractices and maintaining consumer confidence.The paper also analyses the pros and cons of single, twin-peaks and multiple financial regulator and why regulators need to be independent [but accountable] whilst at the same time avoiding industry capture.Although the paper discussed regulation broadly, it discusses financial services regulation in the context of the Malaŵian financial regulatory framework with a brief overview of the regulatory models in the United Kingdom and Zambia.

This document outlines the Government's programme of reform to renew the UK's system of financial regulation. It believes that weaknesses were inherent in the tripartite approach whereby three authorities - the Bank of England, the Financial Services Authority and the Treasury - were collectively responsible for financial stability. The Government will create a new Financial Policy Committee (FPC) in the Bank of England with primary statutory duty to maintain financial stability. The FPC will be given control of macro-prudential tools to ensure that systemic risks to financial stability are dealt with. This macro-prudential regulation must be co-ordinated with the prudential regulation of individual firms. Operational responsibility for prudential regulation will transfer from the FSA to a new subsidiary of the Bank of England, the Prudential Regulation Authority. The third development is the creation of a dedicated Consumer Protection and Markets Authority (CPMA) with a primary statutory responsibility to promote confidence in financial services and markets. Protection of consumers will be delivered though a strong consumer division within CPMA. The document also covers: the issue of market regulation; co-ordination of the regulatory bodies in a potential crisis; the next steps, including public consultation, legislative passage and operational implementation. The Government will, after considering responses, produce more detailed proposals - including draft legislation - for further consultation in early 2011, with a view to having legislation on the statute book within two years.

This publication contains the proceedings of an international conference on the regulation of financial institutions and supervisory structural reforms, held in Washington D.C., United States in December 2003 and involving participants from 52 countries. It considers case studies of experiences of regulatory reform approaches adopted in a number of countries including Australia, South Africa, Ireland, Sweden, Hungary and Estonia.

Financial regulators conduct rulemaking and enforcement to implement law and supervise financial institutions. This book begins by discussing features that make federal financial regulators relatively independent from the President and Congress. It provides a history and overview of the rationale for making financial regulators independent, a discussion of what structural characteristics contribute toward independence and how those characteristics vary among regulators. It then continues to gives a brief description of the structure of the Federal Reserve System (Fed), and discusses the economics of how Fed independence affects monetary policy. The book concludes with an overview of the regulatory policies of the agencies that oversee banking and securities markets and explains which agencies are responsible for which institutions, activities, and markets.