New regulatory powers Designated activities regime The FSMA model and the Regulated Activities Order
FSMA 2000 splits responsibilities for financial services policy and regulation across Parliament, HM Treasury, and the regulators as follows:
Parliament, through primary legislation, sets the overall approach and institutional architecture for financial services regulation, including the regulators’ objectives;
Parliament establishes the parameters within which HM Treasury sets the ‘regulatory perimeter’ through secondary legislation, specifying which financial activities should be regulated and the circumstances in which regulation should apply;
The regulators have the statutory responsibility for setting the direct regulatory provisions that apply to firms which carry out regulated activities, using the powers given to them by FSMA 2000, and following the processes established by it;
Parliament, through FSMA 2000, sets the statutory objectives for the regulators, with requirements set in legislation to ensure appropriate accountability to Parliament, HM Treasury, and the general public.
	FSMA 2000 also establishes a framework whereby any person (whether an individual or firm) can only carry out a regulated activity if that person is authorised by the appropriate regulator (i.e. is an "authorised person") or is exempt (exemptions as specified in FSMA 2000). Under this framework, HM Treasury determines which activities are regulated activities, by specifying activities to be regulated in FSMA 2000 (Regulated Activities) Order 2001 (RAO). Regulated activities include many of the kinds of activities which are carried out exclusively by banks, insurers, and investments firms, and involve providing financial services to the public, such as accepting deposits or offering investment services.
	Firms wishing to carry out a regulated activity must apply to the appropriate regulator for authorisation to do so, and the regulator must assess applications in line with the requirements established in FSMA 2000, which can include considerations of suitability and business models.
	FSMA 2000 gives the PRA and the FCA general rule-making powers, which allow them to make rules which apply to authorised persons, for the purpose of advancing one or more of their statutory objectives. The regulators are required to maintain arrangements for supervising authorised persons, and also have powers to monitor and enforce compliance with the rules.
	Many activities which are currently regulated directly in retained EU law are already regulated activities under FSMA 2000. When retained EU law is revoked, these ‘regulated activities’ will continue to be regulated, in line with the existing FSMA model described above.