FSA/PN/093/2001
16/07/2001

Under transitional arrangements published today by the Financial Services Authority, most firms will have until 30th June 2002 to complete preparations for the conduct of business rules that will relate to all regulated firms from midnight on 30th November this year. Conduct of business rules govern the interaction of firms with their customers. The new conduct of business rules themselves, which represent a harmonisation of the previous rules in force under the previous regimes, have been formally made by the FSAs Board. This gives firms nearly one year to prepare for the new regime.

The main aim of these transitional provisions is to help firms achieve a smooth transfer from the previous regulatory regimes to the FSA regime. In particular, firms will not have to reissue documents relating to their customers.

Michael Folger, Director, Conduct of Business Standards said:

The seven month grace period from the introduction of the conduct of business rules in November represents a good balance between allowing firms time to complete the transition and ensuring that consumers can be clear about the regulatory standards which apply. The transitional rules should help reduce the paperwork associated with the changeover and enable firms to concentrate their compliance resources in areas of genuine benefit to consumers.

There are special arrangements for those professional firms that need to come under FSA authorisation to continue doing investment business. The key feature of these is that professional firms will be allowed more time to complete preparations.

The detailed rules are set out in the Policy Statement Transitional arrangements for the Conduct of Business Sourcebook.

Notes for editors

  1. Policy Statement Transitional arrangements for the Conduct of Business Sourcebook is available on the FSA Website (http://www.fsa.gov.uk).

  2. The Financial Services and Markets Act gives the FSA powers under section 156 (2) to make specific COB transitional rules.

  3. The FSA consulted on transitional arrangements for conduct of business rules in CP 45 and CP 57 during 2000.

  4. Many professional firms (of solicitors, accountants etc) currently do investment business under the authorisation of their professional bodies. It is planned that such firms will have until end October 2001 to decide whether their investment business is of a kind requiring them to seek FSA authorisation. Hence the longer, 12 month, transitional period for such firms to switch to the FSA conduct of business rules.

  5. The Treasury announced on 12th July 2001 that the FSA would become the statutory regulator with effect from midnight 30th November 2001.

  6. 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; the protection of consumers; and fighting financial crime.

  7. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.

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