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FSA (Financial Services Authority)

The Financial Services Authority (FSA) is an independent organisation which regulates companies and businesses within the financial service sector and ensures that the consumer has clear and honest information about the policies, laws and operations of these financial companies. The authority actually operates completely independently from the government, although they are actually accountable to the Treasury Ministers and the government initiated the creation of the Financial Services Authority.

The FSA was officially founded on 20th May 1997, when the Chancellor of the Exchequer announced that the regulatory authorities of the banking supervision and the investment services regulator, to create the SIB or Securities and Investment Board; the board officially changed their name to the FSA in October 1997. From June 1998 the first stages of reform were implemented, when the FSA were granted the responsibility of banking supervision, a role that had previously been filled by the Bank of England.

The firms that are monitored by the FSA include those involved with insurance services, and those companies offering advice and intermediary insurance services, such as insurance brokers. The FSA also regulates companies offering mortgage loan or advice services and those involved in banking deposits. It is these companies which actually fund the organisation and thus ensure that affiliation to the FSA is evidence of the company’s desire to provide a fair and professional service to their customers. The FSA will monitor these companies and ensure that they are meeting certain standards and are also able to enforce observation of these criteria.

The FSA also has the power to investigate the operation of a certain company, if it is suspected of violating the code of practice set by the FSA or endangering the rights of the consumer. The FSA also utilise these powers of investigation to combat financial crime, in terms of the financial services market being exploited as a means to commit serious misconduct. Guaranteeing the security of the market in this way, not only ensures the smoother and more efficient functioning of the financial sector in general, but also indirectly maintains a protection of the consumer.

As part of their services to the consumer, the FSA also make efforts to increase public awareness of both their objectives and the functioning of the financial services sector as a whole. Principally using their website, alongside other publication material, the FSA is attempting to promote the general public’s understanding of the financial system, so that they are aware of their rights and the risks they should be aware of when dealing with companies within the financial service sector. Their principle method of doing this, is offering explanations of financial terms, services and operations completely stripped of jargon and confusing specialised terms.

In order to assist consumers to uncover the best deals, as far as the financial services market is concerned, the FSA have a vast array of advisory and consultancy services. For example, they offer advice on how best to shop around and compare financial features and costs. The website also alerts consumers of the latest warnings and consumers also have the facility to check whether the firm they are dealing with is in fact authorised and approved by the FSA.

The authority also issues several progress reports every year, in which they review not only the general operation of the firms they regulate but also their own performance. This means that the functioning of the whole financial services community is constantly being revised and improved, which will only act in the benefit of the consumer in the long term.