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UK Financial Regulation

Regulation of financial services in the UK is conducted at macro- and micro-prudential levels.

Regulatory Information

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The Financial Policy Committee (FPC) in the Bank of England is responsible for macro-prudential supervision, with primary responsibility for maintaining financial stability. The FPC has no direct powers over individual institutions, but has a power of direction over micro-prudential regulators.

Micro-prudential supervision is the responsibility of two regulatory authorities. The Prudential Regulation Authority (PRA) is in charge of prudential regulation of all deposit-taking institutions, insurers and investment banks. The Financial Conduct Authority (FCA), on the other hand, regulates business conduct in retail and wholesale markets with a primary objective of protecting and enhancing confidence in the UK financial system. It has responsibility for the conduct of business regulation of all financial institutions including those that are regulated prudentially by the PRA and those passporting into the UK.

Regulation of Lloyd's

The Society of Lloyd’s and Lloyd’s managing agents are dual-regulated, i.e. prudential regulation is conducted by the PRA and business conduct regulation is the responsibility of the FCA. Lloyd’s members’ agents and Lloyd’s brokers are FCA-regulated firms.

Regulatory co-ordination between the authorities

It is crucial to the success of the financial supervisory system that there are effective co-ordination mechanisms in place between the PRA and the FCA. The regulators have an MoU between the FCA and the PRA.

Interaction with the EU and international bodies

In March 2019, the European Insurance and Occupational Pensions Authority (EIOPA) and all national competent authorities (NCAs) of the European Economic Area with competencies in insurance agreed MoUs with the Bank of England in its capacity as the PRA and the FCA of the United Kingdom.

A multilateral MoU was agreed on supervisory cooperation, enforcement and information exchange between the EEA NCAs and the UK authorities. Furthermore, a bilateral MoU between EIOPA and the UK authorities was agreed on information exchange and mutual assistance in the field of insurance regulation and supervision. These MoUs took effect on 1 January 2021.

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