UK Legislators Approve Reform Of FSA

by Robin Pilgrim, LawAndTax-News.com, London

13 July 2007

The UK government announced on Thursday the successful passage through Parliament of a new order which aims to reduce a number of burdens currently placed on the Financial Services Authority and business.

The Regulatory Reform (Financial Services and Markets Act 2000) Order 2007 removes some of the burdens placed on the FSA when consulting on guidance, and lightens the authorisation requirements in relation to partnerships whose members change.

Economic Secretary to the Treasury, Kitty Ussher, commenting on the Order's successful passage through Parliament, announced that: "This package of measures will reduce red-tape which will benefit the businesses the FSA regulates. Most significantly, a partnership will normally now be able to continue trading and remain authorised by the FSA following a change in its membership."

Regulatory Reform Orders (RROs) enable the reform of primary legislation. RROs can iron out inconsistencies and amend problems in already enacted legislation without the need for a bill slot.

RROs must always remove or reduce some burdens, but they can also apply new burdens, reapply existing burdens and remove inconsistencies and anomalies.

The Regulatory Reform (Financial Services and Markets Act 2000) Order 2007 came into force on 12 July 2007.

The amendments implemented by the Order include:

• Lightening the authorisation requirements in relation to partnerships whose members change;
• Removing unnecessary consultation between the FSA and regulators in other countries in the European Economic Area;
• Removing the obligation on the FSA to fulfil a number of procedural requirements associated with discontinuing or suspending the listing of a security;
• Exempting the FSA from issuing a warning notice in cases where the cancellation of a sponsor's permission comes from the issuer or sponsor himself;
• Extending the FSA's powers to waive or modify all of its rules in respect of authorised and unauthorised persons;
• Reducing some of the burdens on the FSA when consulting on guidance; and
• Permitting the FSA board to delegate the issuing of guidance.

Some of these measures came out of the 2-year review of FSMA undertaken by HM Treasury in 2003/4. Its purpose was to take stock of the new regulatory system after two years of its operation. During the review, various bodies representing the financial services industry complained about unnecessary or disproportionate consultation burdens placed on industry as a result of FSMA, and raised concerns about restrictions on the FSA's use of waivers and modifications to rules.

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