The Financial Services Authority has scrapped its supervision and risk business units as part of the transition to the new ‘twin peaks’ regulatory restructure.
As of 4th April 2011, the FSA has scrapped its supervision and risk business units as part of the transition to the new ‘twin peaks’ regulatory restructure. These will be replaced by the Prudential Business Unit and the Consumer and Markets Business Unit.
The PBU will be headed up by Hector Sants, FSA chief executive, with Bank of England executive director of banking Andrew Bailey as deputy. Bailey joined the regulator as a Bank secondee yesterday.
FSA enforcement director Margaret Cole will act as interim head of the CBU until Martin Wheatley takes up the role on September 1.
Sants has updated firms on the progress towards the new regulatory structure in the following letter to CEOs:
When I wrote to you in February I said I would update you again this month on our progress towards the new regulatory structure the government intends to introduce.
You will recall the government plans to transfer prudential supervision of banking and insurance to a subsidiary of the Bank of England, the Prudential Regulation Authority, and rename the Financial Services Authority the Financial Conduct Authority, which will focus on consumer protection and market regulation.
We have today reached our first milestone on the way to this, with an internal reorganisation to help us evolve into the proposed new structure.
This sees us replace our Supervision and Risk business units with a Prudential Business Unit (PBU) and a Conduct Business Unit (CBU). I have attached an organisation plan to show you how this looks. As you will see, I will head the PBU and be supported by Andrew Bailey, who joins us today as a Bank of England secondee. Margaret Cole will be interim head of the CBU until Martin Wheatley takes up
this role on 1 September 2011.
This restructure begins a gradual process to ensure we are ready to transfer to the new structure. Part of this evolution will see us design and pilot new processes and train staff, and until this is done we will continue with integrated supervision of your firm and existing ways
of working, such as our ARROW operating framework.
As part of the preparation we will be looking at what the changes will mean in practice, such as what supervision will look like in the two successor bodies, how they will interact, and how processes like authorisation will work across two separate organisations.
We know this period will bring challenges, but we have a clear plan of what we need to do to make sure we are ready, and we are firmly on track to deliver by the intended timescales. We are focused on making sure our work creates minimal disruption for your firm, and so we will not be introducing any new discretionary initiatives during the transition period.
You are probably aware that the government has to introduce legislation to allow for the formal transfer of power from the FSA to the successor regulators. This legislation must go through debate, scrutiny and amendment in the House of Commons and then the House of Lords. The legislation will then receive Royal Assent, when the Bill becomes law, which we expect to happen during 2012.
We will give your firm more information on the high-level philosophies of the new bodies later this year. If you have any questions before then, please get in touch with your FSA contact. Your FSA supervisor will let your firm know, if they have not done so already, whether your FSA contact will change as a result of our restructure today.