This is part of our content series on the Financial Services & Markets Bill (FSM), its potential impacts and the alterations to the Bill that various advocacy groups are calling for. The FSM was announced in May 2022. It is a landmark piece of UK government legislation that will significantly change how our country regulates its financial services industry.
Authorised Push Payment (APP) fraud
A type of scam that tricks its victims into thinking they are sending money to a genuinee payee, such as their bank or an online shopping company.
Capital
The assets, or things of value, that an institutions owns.
Capital requirements
How much capital a financial institution must always have on hand, as determined by the regulators. The idea is that if the instutions runs into financial trouble, it will have enough assets to draw on to prevent it from collapsing or otherwise causing a crisis.
European Union (EU)
A political and economic grouping of 27 countries, who are bound by common laws and regulations. The UK voted to leave the EU in 2016, and formally left the club in 2020.
Financial Conduct Authority (FCA)
One of the main UK financial regulatory bodies, alongside the PRA and the FPC. Amongst other things, the FCA governs how financial products are marketed to consumers. It operates independently of the UK government and was formed in 2013 as a replacement for the Financial Services Authority (FSA).
Financial Policy Committee (FPC)
Part of the Bank of England, and one of the main UK financial regulatory bodies, alongisde the FCA and the PRA. As part of its role monitoring the economy, the FCA looks for financial issues that it thinks could harm the country’s economic growth. It was set up in 2013 and is accountable to the UK government.
Financial Services & Markets Bill (FSM)
A pending piece of UK legislation that will significantly change the state’s goals and regulation requirements for the country’s financial sector, including by implementing the Future Regulatory Framework.
Future Regulatory Framework (FRF)
The UK government’s proposals for how the UK financial sector should be regulated post-Brexit, now it is no longer bound by EU law.
Future Regulatory Framework Review (FRF)
A government consultation on the FRF, which concluded in February 2022.
Levelling up
A government policy that aims to ‘spread opportuntity more equally across the UK’ by improving social and economic outcomes in less prosperous areas, with a particular focus on regions outside London and the South East.
Liquid capital
Assets that can be easily sold. Money is the most liquid of assets.
Liquidity requirements
How much liquid capital a financial institution must always have on hand, as determined by the regulators. Stipulations that a portion of institutional capital requirements must be liquid is meant to ensure that any financial problems can be responded to quickly enough to stop them becoming a crisis.
Net zero
When the total amount of greenhouse gases being emmitted are equal or less than the amount being removed from the environment. The UK government has pledged to reach net zero by 2050.
Prudential regulation
A type of financial regulation that is focused on risk reduction, for example by requiring financial firms to meet specified capital, liquidity, and public disclosure requirements.
Prudential Regulation Authority (PRA)
Part of the Bank of England, and one of the main UK financial regulatory bodies, alongisde the FCA and the FPC. The PRA oversees the prudential regulation of financial institutions such as banks, building societies, insurers, investment firms and credit unions. It was formed in 2013 as a replacement for the Financial Services Authority (FSA).
Regulator
A supervisor, whose role is to make sure the rules are being followed.
Solvency II
A set of regulatory requirements for insurance firms and groups. It came into force in 2016. The Financial Services & Markets Bill will allow the government and PRA to pursue changing it so that insurers have lower thresholds for the amount of capital they must hold in reserve.
Further reading
- Introduction to the Financial Services & Markets Bill
- How will the Financial Services & Markets Bill impact financial regulation?
- How will the Financial Services & Markets Bill impact the environment?
- How will the Financial Services & Markets Bill impact financial inclusion?
- How will the Financial Services & Markets Bill impact democratic accountability?