§ Mr. Russell BrownTo ask the Chancellor of the Exchequer what transitional arrangements will be put in place as part of the entry into force of the main provisions of the Financial Services and Markets Act 2000. [6537]
§ Ruth KellyI announced on 12 July that the date, known as "N2", on which the main provisions of the Financial Services and Markets Act 2000 (FSMA) will 575W come into force will be Saturday 1 December. Regulation of financial services by a single statutory regulator, the Financial Services Authority (FSA), operating under a single body of law will bring substantial benefits to financial services firms and consumers.
A large number of firms are already authorised to carry on financial services under existing legislation; a small number of firms and individuals will require authorisation for the first time at N2. For all financial services firms and individuals the Government seek to minimise the disruption arising from the introduction of the new framework for financial services regulation, while maintaining the appropriate degree of consumer protection.
A number of transitional issues arise from the replacement by FSMA of existing regulatory frameworks. The Government have made or expect to make transitional orders covering the treatment of misconduct by firms which was committed before N2; applications for authorisation to existing regulators which are partly completed by N2; complaints about financial services firms to the ombudsman which will be replaced by the Financial Ombudsman Service; and a significant number of other issues.
Today the Financial Services and Markets Act 2000 (Transitional Provisions)(Authorised Persons etc.) Order 2001 has been laid before Parliament. This Order provides, in summary, that if a firm is authorised by one of the existing financial services regulators that firm is from N2 to have equivalent authorisation under FSMA.
The Order generally requires the FSA to use its best endeavours to provide by N2 firms' scope of permission under FSMA. Where the FSA is unable to provide this, firms will not have contravened, for those activities which they were carrying on prior to N2, the requirement that they carry on only regulated activities for which they have permission from the FSA.
A small number of firms are expected to require authorisation for the first time at N2. As I also announced on 12 July, these firms will be able to apply for authorisation by the FSA under FSMA from 3 September. We will legislate to ensure that new applications for authorisation received before N2 for activities currently carried on lawfully will have, where appropriate, interim authorisation under FSMA until the application has been determined.