Banking regulation—United Kingdom—Q&A guide

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Banking regulation—United Kingdom—Q&A guide
  • 1. What are the principal governmental and regulatory policies that govern the banking sector?
  • 2. What are the defining characteristics of a bank to be caught by the banking laws and regulations? Is non-bank fintech regulated differently?
  • 3. Do the rules vary depending on the size or complexity of the banking institution?
  • 4. Summarise the primary statutes and regulations that govern the banking industry.
  • 5. Which regulatory authorities are primarily responsible for overseeing banks?
  • 6. Describe the extent to which deposits are insured by the government. Describe the extent to which the government has taken an ownership interest in the banking sector and intends to maintain, increase or decrease that interest.
  • 7. Which legal and regulatory limitations apply to transactions between a bank and its affiliates? What constitutes an ‘affiliate’ for this purpose? Briefly describe the range of permissible and prohibited activities for financial institutions and whether there have been any changes to how those activities are classified.
  • 8. What are the principal regulatory challenges facing the banking industry?
  • 9. Are banks subject to consumer protection rules?
  • More...

Banking regulation—United Kingdom—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to banking regulation in United Kingdom published as part of the Lexology Getting the Deal Through series by Law Business Research (published: January 2021).

Authors: 1 Crown Office Row—Edite Ligere

1. What are the principal governmental and regulatory policies that govern the banking sector?

The UK's banking sector is regulated for prudential purposes by the Prudential Regulation Authority (PRA), which is part of the Bank of England, the UK's central bank, and the Financial Conduct Authority (FCA) for conduct purposes. The Financial Policy Committee (FPC), which operates from within the Bank of England, acts as the macro-prudential regulator for the UK's financial system.

The Financial Services and Markets Act 2000 (FSMA 2000), as amended (Financial Services and Markets Act 2000 (legislation.gov.uk)), sets out the PRA's and the FCA's statutory objectives. The PRA's principal objective is to promote the safety and soundness of the firms it regulates. On 28 March 2018, the PRA published Supervisory Statement (SS)1/18 'International banks: the Prudential Regulation Authority's approach to branch authorisation and supervision', which replaces SS10/14 'Supervising international banks: the Prudential Regulation Authority's approach to branch supervision'. SS1/18 is relevant to all PRA-authorised banks and designated investment firms not incorporated in the United Kingdom that form part of a non-UK headquartered group (international banks) and that are operating in the United Kingdom

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