6 - Regulation of the financial services industry

Abstract

This chapter discusses the regulation of the financial services industry. All sectors of the financial services industry now appear to appreciate the importance of corporate communication—all forms of public relations, exhibitions, design, and marketing, including direct mail and, especially, advertising. The Financial Services Act 1986, as amended, provides the basis on which a regulatory framework has been erected to meet these needs. The Act defines the investments to be regulated (Schedule I), which means in effect all financial investments with the exception of traditional banking and building society business and the money markets. The primary concept on which the regulatory system is based is that of authorization: every investment firm needs to be authorized to continue trading. To obtain authorization, a firm has to be fit and proper, that is, of good repute, competent to do the type of investment business for which it is applying for authorization, and with sufficient finance to support its operations. Advertisements are required generally to indicate who regulates the firm placing the advertisement so that customers will know to whom complaints should be addressed.