Background to Act
3.In 1997, the Government proposed a new system of financial regulation in the UK. A tripartite structure for overseeing the UK financial system was created, with distinct roles for HM Treasury (the Treasury), the Bank of England (the Bank) and the Financial Services Authority (the FSA) (together, the Authorities) and distinct responsibilities for overall financial stability issues, which are set out in a memorandum of understanding between the Authorities.
4.The Bank of England Act 1998 established the arrangements for the Bank’s current monetary policy responsibilities. Under the 1998 Act, the banking supervision function that had previously been undertaken by the Bank was transferred to the FSA.
5.The Financial Services and Markets Act 2000 set out the framework within which the FSA operates, as the single regulator for the financial services industry. It also established the framework for the Financial Services Compensation Scheme (the FSCS) to provide compensation for consumers in the event that a financial services firm is unable to meet its obligations to them.