The Rationale for a Single National Financial Services Regulator

Revisiting the Rationale for a Single National Financial Services Regulator

This new edition provides a guide to the main areas of financial regulation and financial law in Hong Kong. Given the massive changes in financial regulation globally as a result of the 2008 global financial crisis and post-crisis international regulatory reforms, this book addresses these changes in Hong Kong markets and their legal and regulatory frameworks, as well as the implications of these changes to future market development. The book is in five parts. The first part considers the evolution of Hong Kong’s role as a financial centre and the development of its financial regulatory structure, one that is perhaps unusually complex given the size of the jurisdiction. The second part discusses the regulation of the banking, securities, and insurance sectors, including the regulatory powers of the Hong Kong Monetary Authority (HKMA), the Securities and Futures Commission of Hong Kong (SFC), the Office of the Commissioner of Insurance (OCI), and the forthcoming independent Insurance Authority (IA). The third part covers regulation of financial products and services, including securities offerings and listings, investment products and asset management, financial derivatives, and takeovers and mergers. The fourth part addresses market conduct and misconduct, including corporate governance, market abuse, and financial crime. Finally, the fifth part examines the international context, focusing on the relationship between Hong Kong’s financial markets and regulation and mainland China as well as key issues for Hong Kong’s role as a major global financial centre.

Escaping Entity-Centrism in Financial Services Regulation

This chapter examines the statutory framework for financial services regulation in the UK. The regulatory reforms that culminated in the break-up of the Financial Services Authority (FSA) and the return of regulatory responsibilities to the Bank of England have complicated but in many ways reinforced the original vision of a consolidated statutory framework for all financial services regulation under the Financial Services and Markets Act 2000 (FSMA). The FSMA is undoubtedly more complicated because of the need to accommodate collaboration between the Financial Conduct Authority (FCA) and the Bank of England acting as Prudential Regulation Authority (PRA). The chapter provides an overview of the structure and statutory framework of the FSMA as well as the functions of the FCA and the PRA. It also considers the scope of financial services regulation under the FSMA and the confidentiality of information obtained by the FCA and the PRA in the discharge of their functions.

Ten years on from the creation of the Financial Services Authority as one of theworld's first “unified” financial services regulators seems an appropriate time to take stock with the first external review of its performance. After a decade of growth and development, how effective is it as a regulator of the UK's financial services industry? In April this year, the National Audit Office published a value-for-money report on five key areas of the FSA's work.

Many parties engage in banking as the financial services industry grows, particularly in Indonesia. To keep banks safe, financial services must emphasize customer protection. The Financial Services Authority (OJK), Indonesia's financial services regulator, implemented several consumer protection measures. The policy may hurt banks despite protecting customers. Consumer protection laws strengthen banks. Proper protection would make clients feel safer and increase bank trust. Banks with strong consumer protection regulations will attract more clients since customers will feel safe doing so. This study examines how the OJK regulation's implementation on financial services consumer protection affected national commercial banks' financial performance from 2017 to 2021. This study adopts descriptive and verifiative approaches to analyze 93 national commercial banks in Indonesia from 2017 to 2021. The research utilizes secondary data from the Financial Services Authority (OJK) and bank financial statements. The investigations done have led to the conclusion that implementing consumer protection can improve bank financial performance and lower credit risk

The Fatal Flaw of Proposals to Federalize Insurance

The Financial Services and Markets Act 2000 (FSMA 2000) gave the Financial Services Authority (FSA) four statutory objectives of maintaining market confidence (Section 3), raising public awareness (Section 4), protecting the consumer (Section 5) and reducing financial crime (Section 6). An additional statutory objective (Section 3A) to maintain financial stability in the financial system was added by virtue of the Financial Services Act 2010 (Section 1(3)). One of the most novel and innovative parts of the new legislation is the market abuse regime contained in Part VIII of the FSMA 2000, and amended by the Market Abuse Directive. The broad aim of which is to ensure the integrity and probity of the financial markets while at the same time protecting consumers of financial products, lacking in previous regimes. As such the Market Abuse provisions within the FSMA, enforced by the FSA, arguably support at least two of the objectives, market confidence and systemic risk, and protecting the consumer, while also further supporting the financial crime objective. The market abuse regime was enacted to run parallel to the criminal provisions of insider dealing included in Part V of the Criminal Justice Act, and to complement the market manipulation provisions of the FSMA (Section 397), which replaced the older provisions of the Financial Services Act 1986. The global financial crisis that emerged through 2007 and into 2008 has precipitated major reforms of the regulatory structure with the FSA replaced by the Financial Conduct Authority (FCA), and the replacement of the original statutory objectives, with the financial crime objective replaced by an integrity objective. The core of the market abuse regime forms part of the risk-based approach common in much of the FSA’s and now the FCA’s approach to financial services regulation. The regime guards against the risk that misuse of information by market participants will lead to a lack of integrity in the UK’s financial markets and thus dissuade users from engaging with such an important component of the UK economy. This chapter will assess how the market abuse regime of the FSMA attempts to deal with the risk posed to financial markets by the misuse of information by market participants. The chapter will analyse the risks posed by the misuse of information, with some focus on insider dealing under both the civil and criminal provisions. The purpose is to assess whether the regime in its amended form is capable of ensuring that the UK financial markets are free from abusive practices and continue to operate in a fair and open manner.

The establishment of the Financial Services Authority (FSA) as the new unified regulator heralded fundamental change for UK financial services regulation. The FSA has developed detailed general corporate governance arrangements applicable to firms, individuals and systems. The FSA has also developed specific governance arrangements in the insurance sector which enrol private actors, actuaries and auditors in regulation. Together, the arrangements form a multilayered governance and accountability network involving a wide range of actors and stakeholders. This paper examines the changing public accountability role of two key groups of private actors in the governance arrangements of life insurers by using empirical evidence gathered from actuaries and auditors. The paper concludes that the FSA, as a key government regulator acting on behalf of the public, carries out its public accountability function in part by the enrolment of private actors, involving a decentred, fragmented and hybridised approach to financial services regulation.

The positive-list and negative-list modes of financial regulation differ in terms of which sectors are open to foreign services and suppliers. In the positive-list mode, only the listed sectors are accessible to foreign entities, whereas in the negative-list mode, all sectors are open except for those explicitly prohibited by law. Recent trade agreements such as RCEP, CPTPP, and USMCA have moved away from positive-list mode, especially in financial services regulation. While they do not adopt the negative-list mode either, they introduce new financial service clauses that facilitate market access for innovative financial products. These agreements also serve as a benchmark for opening up other sectors. They will continue to offer financial products, but their product types and transfer forms will differ from current financial services. China iscreating significant challenges in establishing a correct understanding of the new financial services clause, developing a robust regulatory system, and mitigating risks associated with opening the financial services market.

Consumers experience mistreatment and unfair treatment within the mainstream financial services industry. Such mistreatment can include unsatisfactory and disrespectful interactions with staff, lack of access to beneficial and affordable financial products and services, geographic difficulty in visiting a retail location, disability access issues, and policies and practices that result in different costs, opportunities, and experiences for various populations. Yet knowledge gaps remain regarding the implications of such mistreatment on consumer financial well-being. Using data from the 2016 National Financial Well-Being Survey (N = 6,171), we hypothesize that financial services mistreatment is negatively linked to individuals’ access to financial services, thereby negatively associated with their financial well-being. The results support the hypothesis. The results indicate that individuals experiencing financial services mistreatment had financial well-being scores approximately 5.4–5.6 points lower than those without such experiences, with financial access mediating 1.1%–7.9% of the total effects depending on the specific financial product examined. Implications for financial services policymakers and regulators, the financial service industry, and financial services practitioners are discussed.

The United Kingdom's Response to Crisis: A Critical Examination of the New Regulatory Structure of Financial Services Supervision.

Continuous and stable supervision can be carried out by an independent institution such as Bank Indonesia or the Financial Services Authority. The basis for establishing the Financial Services Authority considers various aspects, especially technological aspects, where growth and development as well as financial service systems are increasingly needed by the public quickly and precisely. With the birth of the Financial Services Authority, regulation and supervision of financial service institutions can be easily carried out through one door, remembering that financial service institutions are not only banks but also non-bank financial service institutions and capital markets. With the formation of the OJK, it is hoped that it can support the interests of the financial services sector as a whole and increase the competitiveness of financial services institutions themselves in making contributions to national development.

A Theory of Financial Services Competition, Compliance and Regulation

PurposeThe purpose of this paper is to investigate conceptualizations of Europeanization, the difficulties this creates when assessing the impacts of the European Union (EU) on member states and the influence member states have on the EU policy‐making processes. There are also problems when considering questions regarding the basis of Europeanization in terms of its relationships with globalization, governance, institutionalization, polity, politics and policy.Design/methodology/approachDifferent conceptualizations of Europeanization concentrate on distinct methodological positions and whether Europeanization may best be understood as “situation” or “process”. Indeed, difficulties are further exacerbated when identifying the extent that drivers for change at the EU and domestic level involved Europeanization, domestication, globalization and/or European integration. Meso theory identifies “process” and substantive theory “situation” in terms of downloading (En1), up‐loading (En2) and cross‐loading (En3). Each of these conceptualizations allow “situations” where empirical reliability could be made explicit from a particular perspective.FindingsThis paper investigates and assesses the Europeanization of UK financial services and provides a conceptualization of Europeanization as both meso (middle range) and substantive theory. By breaking down meso theory into substantive theories (up‐loading, downloading and cross‐loading) the analysis attempts to clarify the interaction between Europeanization, globalization and domestication in relation to impacts on UK financial services regulation. Following an assessment of UK financial services in general, this paper concentrates on the concept of “competent authority” and how the UK Financial Services Authority (FSA) displays attributes outlined in the directives. Through an analysis of the Third Life Assurance Directive, Second Banking Directive and FSA this paper identifies a number of issues relating to how the EU responded to sector demands and how Europeanization is actualized through domestic response.Originality/valueEuropeanization indicates a continual interaction or dialectic between the uniformity of the EU and the diversity of the individual member states. The process involves interaction between global, domestic and European variables with the European dimension in relation to domestic interpretation providing a mechanism whereby dominant economic global factors can be diminished or enabled.