Reforming the Regulatory Framework

In 2010 the Government outlined plans for reform of the UK regulatory framework, including the creation of an independent Financial Policy Committee at the Bank of England and a new prudential regulator as a subsidiary of the Bank. The Government issued consultation documents on the plans in July 2010 and February 2011, and subsequently in June 2011 a White Paper and draft Bill provided further details of the Government's proposed reforms. On 27 January, the Financial Services Bill was published following completion of the pre-legislative scrutiny process.

 

In May 2011 the Bank and FSA hosted a Conference on the future of prudential regulation in the UK. As part of the event the Bank and FSA published a joint paper, 'The Bank of England, Prudential Regulation Authority - Our approach to banking supervision'. The paper represents a significant milestone in thinking and looks to promote debate about the design of prudential regulation in the UK. The proposed regulatory model will be based on forward-looking judgements and underpinned by a single objective for the PRA to promote the stability of the UK financial system. On 20 June 2011 the Bank and FSA hosted a closely-related Conference to promote debate on the future of insurance regulation in the UK.

 

Alongside the publication of the Bill on 27 January 2012, the Bank and FSA published a draft Memorandum of Understanding between the Financial Conduct Authority and the Prudential Regulation Authority. Draft Memoranda of Understanding on financial crisis management and on international organisations have also been published as annexes to the Government's paper 'A new approach to financial regulation: securing stability and protecting consumers'. On 27 February the Bank and FSA provided Parliament with an explanation as to how the PRA will consult. The document has been published for consideration alongside scrutiny of the Financial Services Bill in Parliament and can be found below, alongside other key publications.