Financial Services Act 1986

Financial Services Act 1986

Legislation in the United Kingdom that largely deregulated financial services. Specifically, it removed from courts the ability they previously held to regulate derivative contracts. Most of the Act (though not the aforementioned example) was repealed by the Financial Services and Markets Act 2000.

Financial Services Act 1986

(as amended by the Financial Services and Markets Act, 2000) a UK act which provides a regulatory system for the FINANCIAL SECURITIES and INVESTMENT industry. The Act covers the businesses of securities dealing and investment, commodities and financial futures, unit trusts and some insurance (excluding the Lloyds insurance market). Also excluded from its remit is commercial banking, which is supervised by the Bank of England, and mortgage and other business of the building societies, which is regulated separately by the BUILDING SOCIETIES ACT 1986.

The main areas covered by the Act are the authorization of securities and investment businesses, and the establishment and enforcement of rules of good and fair business practice. The DEPARTMENT OF TRADE AND INDUSTRY, together with its appointed agency, the Financial Services Authority (formerly the Securities and Investment Board), is responsible for the overall administration of the Act, in conjunction with Recognized Investment Exchanges (RIEs) and Recognized Professional Bodies (RPBs).

Originally the Act set up five Self-Regulatory Organizations (SROs) to regulate firms providing financial securities and investment services: The Securities Association (TSA), Association of Futures Brokers and Dealers (AFBD), Investment Management Regulatory Organization (IMRO), Life Assurance and Unit Trust Regulatory Organization (LAUTRO) and Financial Intermediaries, Managers and Brokers Regulatory Association (FIMBRA). The TSA and ABRD merged in 1991 to form the Securities and Futures Authority (SFA) and in 1994 LAUTRO and FIMBRA merged to form the Personal Investment Authority (PIA). In 2000 the newly established Financial Services Authority took over the responsibilities for the three remaining Self-Regulatory Organizations thus bringing all aspects of the regulation of the securities and investment industry under the ‘one-roof.

The general objective of the legislation is to ensure a high level of investor protection by ensuring that only persons deemed to be ‘fit and proper’ are authorized to undertake securities and investment business, and that they conduct their business according to standards laid down by the SROs, RIEs and RPBs; leading, for example, in the former case, to the clarification of the relationship between the firm and its clients, especially as regards disclosure of fees, charges and the capacities in which the firm may act, and, in the latter case, to open and fair pricing.

The Financial Services Act also paved the way for important changes in the structure of the personal financial services industry. The Act together with the BUILDING SOCIETIES ACT, 1986 has enabled financial services providers such as insurance companies and building societies to broaden their portfolio of product offerings to include, for example, personal pensions, unit trusts and individual savings accounts (ISAs) thus increasing competition in the industry by breaking down traditional ‘demarcation’ boundaries in respect of ‘who does what’.

A Recognized Investment Exchange is a body such as the STOCK MARKET, LONDON DERIVATIVES EXCHANGE which provides an organized framework within which transactions can be effected, including facilities for making a market in a financial asset or commodity (see MARKET MAKER), monitoring and reporting completed transactions and providing for settlement and delivery through an appropriate clearing mechanism.

A Recognized Professional Body is an organization such as the Chartered Accountants in England and Wales, which is responsible for regulating its members in relation to their work in advising clients on their investments.

Financial Services Act 1986

(as amended by the Financial Services and Markets Act 2000) a UK Act that provides a regulatory system for the FINANCIAL SECURITIES and INVESTMENT industry The Act covers the businesses of securities dealing and investment, commodities and financial futures, unit trusts and some insurance (excluding the Lloyds insurance market). Also excluded from its remit is commercial banking, which is supervised by the Bank of England, and mortgage and other business of the building societies, which is regulated separately by the BUILDING SOCIETY ACT 1986.

The main areas covered by the Act are the authorization of securities and investment businesses, and the establishment and enforcement of rules of good and fair business practice. The DEPARTMENT OF TRADE AND INDUSTRY, through its appointed agency, the Financial Services Authority (formerly the Securities and Investment Board), is responsible for the overall administration of the Act, in conjunction with RECOGNIZED INVESTMENT EXCHANGES (RIES) and RECOGNIZED PROFESSIONAL BODIES (RPBS).

Originally the Act set up five SELF-REGULATORY ORGANIZATIONS (SRO) to regulate firms providing financial securities and investment services: The Securities Association (TSA), Association of Futures Brokers and Dealers (AFBD), Investment Management Regulatory Organization (IMRO), Life Assurance and Unit Trust Regulatory Organization (LAUTRO) and Financial Intermediaries, Managers and Brokers Regulatory Association (FIMBRA). The TSA and AFBD merged in 1991 to form the Securities and Futures Authority (SFA), and in 1994 LAUTRO and FIMBRA merged to form the Personal Investment Authority (PIA). In 2000 the newly established Financial Services Authority took over the responsibilities of the three remaining self-regulatory organizations, thus bringing all aspects of the regulation of the securities and investment industry under ‘one roof.

The general objective of the legislation is to ensure that only persons deemed to be ‘fit and proper’ are authorized to undertake securities and investment business, and that they conduct their business according to standards laid down by the SROs, RlEs and RPBs, leading, for example, to the clarification of the relationship between the firm and its clients, especially as regards disclosure of fees and charges.

The Financial Services Act also paved the way for important changes in the structure of the personal financial services industry. The Act, together with the Building Societies Act 1986, has enabled financial services providers such as insurance companies and building societies to broaden their portfolio of product offerings to include, for example, personal pensions, unit trusts and individual savings accounts (ISAs), thus increasing competition in the industry by breaking down traditional ‘demarcation’ boundaries in respect of ‘who does what’.

References in periodicals archive ?
The Ombudsman agreed that the company had been in breach of the Financial Services Act 1986 after complaints prompted by a union survey found that 98% believed they had been guaranteed by Scottish Provident that the endowment would definitely repay their mortgage and provide a healthy excess.
The levy on the Self Regulatory Organisations, who will pass the costs on to their members, was set up by law as part of the investor protection framework under the Financial Services Act 1986.
This study, in so far as it is distributed in the UK, may only be made available to individuals who are considered authorized under the Financial Services Act 1986 or are exempt, or to individuals as defined in ss.
In the United Kingdom, this report may only be distributed or passed on to persons of the kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 (as amended by the Financial Services Act 1986 (Investment Advertisements) (exemptions) Order 1997.
South African-born Le Roux (47), of Church Brampton, Northants, and Hooper (47), of Wandsworth, south London, admitted making a misleading statement under the Financial Services Act 1986.
This Announcement has been issued by, and is the sole responsibility of, Insight Enterprises and has been approved solely for the purposes of Section 57 of the Financial Services Act 1986 of Great Britain by Morgan Stanley & Co.
This announcement is published on behalf of Gemini Genomics, is the sole responsibility of Gemini Genomics and has been approved by Seymour Pierce Limited, which is regulated in the United Kingdom by the Securities and Futures Authority Limited, solely for the purposes of section 57 of the Financial Services Act 1986.
In the United Kingdom, this report may only be distributed or passed on to persons of the kind described in Article 11 (3) of the Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order 1996 (as amended by the Financial Services Act 1986 Investment Advertisements) (Exemptions Order 1997).

Full browser ?