FSA consults on common wording for disclosure of regulatory status
29/05/2002
The FSA is today consulting on a common framework for all authorised firms to disclose their regulatory status to consumers at initial meetings and in their letterhead. It will also require firms to provide customers with information about the complaints and compensation arrangements.
The proposed framework has three main elements:
on initial contact with a private customer: disclosure of the firms status under the Financial Services and Markets Act (FSMA);
in letters (and electronic equivalents): a similar disclosure. Usually, firms can meet this by including the required disclosure on their letterheads;
before carrying on a regulated activity with or for a private customer: a written restatement of the firm's status under the FSMA, with information about complaints and compensation arrangements that may be available.
The new framework will ensure consistency of disclosure of regulatory status. This should, over time, raise awareness of authorisation and regulation as a badge of legitimacy for business carried out under the FSMA and increase public awareness of, and confidence in, the financial system.
Detailed wording
Under the proposals, the wording for UK domestic firms and other firms directly authorised by us will be: 'Authorised and regulated by the Financial Services Authority'. For a firm that is authorised under the FSMA because of authorisation by a non-UK EEA regulator, the wording becomes: 'Authorised by [name of home state regulator] and regulated by the Financial Services Authority for UK business'.
Guidance on use of the FSA logo
The FSA is also consulting through this CP on the terms of Handbook guidance under which firms would be permitted to reproduce its logo on their letterheads. The logo is a registered mark and the property of the FSA, but it is aware that some firms wish to be able to use it in this way.
In the meantime it has published temporary guidance on the use of the logo. By issuing guidance in this way firms will be able to use the FSA logo immediately, so long as they keep to the FSAs licensing conditions.
Notes for editors
The FSA is seeking comments on the proposals in Consultation Paper (CP) 138 Disclosure of status under the Financial Services and Markets Act 2000 and use of the FSA logo by 31 August 2002.
CP138 can be found on the FSA's website - www.fsa.gov.uk/Pages/Library/Policy/CP/2002/138.shtml.
Once the FSA has considered responses it would expect to make the rules towards the end of 2002 or early in 2003. FSA are proposing a period of 12 months from making the rules to their implementation. This will minimise the costs to firms.
The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.