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What is the Financial Services Authority?

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  • Written By: Nicholas K.
  • Edited By: R. Halprin
  • Last Modified Date: 25 September 2016
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The Financial Services Authority (FSA) regulated the mortgage and financial trading sectors in the British economy in the early 21st century. This independent agency was created to eliminate financial fraud and protect consumers from market manipulation. Consumers and bank officials were able to stay current on banking issues using publications through the Authority. Market regulation under the Authority was possible through broad powers over pensions, mortgages, and bank loans. The Financial Services Authority was reorganized into multiple agencies starting in 2010 due to concerns about the agency’s substantial powers.

The Financial Services and Markets Act of 2000 passed by the British Parliament created the FSA with offices in London and Edinburgh to oversee major players in the financial industry. The Authority emerged due to concerns about insufficient regulation over banks and investment firms in the United Kingdom. The primary objective for the agency was to increase confidence in British banks. Additional objectives as noted in the authorizing law included reducing crime in the financial industry and educating the public about banking services.

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The website for the Financial Services Authority featured publications that made the financial industry more accessible to consumers. The FSA Handbook, for example, outlined all of the regulatory powers of the Financial Services Authority as authorized by the national government. The Retail Distribution Review was a regular publication that educated the public on different types of investments. The FSA Register was updated regularly to reflect all banks and investment firms authorized to conduct business in the United Kingdom.

This regulatory agency had numerous powers at its disposal to oversee the British economy. It was able to regulate the creation and management of mortgages. Every pension created by a British-based company needed to be approved through the Authority. Each deposit or withdrawal at a British bank was subject to review by the Financial Services Authority. The agency’s authority also extended to insurance providers like Lloyd’s of London.

The coalition government that assumed power in the British Parliament in 2010 worked to dismantle the Financial Services Authority. It was identified by Chancellor of the Exchequer George Osborne as an oversized agency with too many responsibilities. This criticism was due in part to the failure of the agency to regulate the financial sector during the global economic crisis beginning in 2007. The responsibilities once held by the FSA were parceled out gradually between the Bank of England and newly created departments including the Economic Crime Agency and the Consumer Protection Agency.

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