H.M. TREASURY

HM Treasury News Release

150/00

21 December 2000

PROGRESS TOWARDS BETTER FINANCIAL REGULATION

Welcoming continuing progress towards implementation of the Financial Services and Markets Act 2000 (FSMA), Economic Secretary Melanie Johnson today said:

"There has been good progress on implementation of the Financial Services and Markets Act since Royal Assent in June. The Treasury has issued thirteen pieces of draft secondary legislation, and the FSA has published large parts of the FSA Handbook in draft. Consultation on the major draft orders published by the Treasury in October has now closed.

"We will now move to incorporate helpful suggestions as quickly as possible. We are grateful for the comments we have received and will be studying them closely.

"It is important that firms and consumers enjoy the full benefits of the new system of financial services regulation as soon as practicable. I want to see all parties involved in the complex and detailed process of implementation working to that end.

"The target I set last July of N2 in about one year remains. It is still too early to be more precise on when the Act will come into force. As soon as I can give a firm date, I will do so. I plan to do so during the Spring. There will be a reasonable time for industry preparations between announcing a firm date and N2."

Sir Howard Davies, Chairman of the FSA, said:

"We welcome the progress that has been made to date, the Government’s plan to announce a firm date in the Spring, and to provide a reasonable time for industry preparations between announcing a firm date and N2. We look forward to full implementation of the new legislation as soon as the necessary preparations, including industry preparations, have been made."

NOTES FOR EDITORS

The coming into force of the Financial Services and Markets Act 2000 is known as N2. Melanie Johnson announced the target for N2 of about one year’s time on 18 July 2000 (Treasury press release 92/00).

Before the Act can come into force a number of pieces of secondary legislation need to be approved by Parliament. Further details are in a Treasury document of August 2000, Financial Services and Markets Act: The Way Ahead, which is available on the Treasury website (www.hm-treasury.gov.uk/legislation.html).

On 26 October the Treasury published seven pieces of draft legislation in two consultation documents:

a) A draft of the Regulated Activities Order (which will be made using powers under section 22 of FSMA), together with draft orders on:

when regulated activities are and are not being carried on by way of business (section 419);

persons who will be exempt from the requirement for FSA authorisation (section 38);

the exemption of appointed representatives of authorised persons (section 39); and

activities which will not be exempt regulated activities under Part XX of FSMA (section 327)

b) Draft orders on financial promotion (section 21) and on the promotion of collective investment schemes (section 238).

Consultation on these documents closed on 20 December.

On 7 December the Treasury published consultation documents on six pieces of legislation:

Redress for contravention of an FSA requirement or rule (sections 20, 71, 150 and 202 of FSMA refer);

Disclosure of information (section 353);

Service of notices under FSMA (section 414);

Recognition requirements for investment exchanges and clearing houses (section 286);

Markets and investments prescribed for market abuse (section 118);

Transitional provisions (section 426).

Responses are sought to these consultation documents by 2 February 2001.

All consultation documents are on the Treasury’s website (www.hm-treasury.gov.uk/pub/html/reg/index.html).Printed copies are also available from Tima Musa on 020 7270 1634.

Media enquiries should be addressed to Charles Keseru on 020 7270 5188.