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The overall remit of the Financial Services Authority (FSA), as stipulated by the government, is to:
In practice, this means that the FSA regulates the activities of financial organisations, from huge banks right down to small independent firms. Regulation covers a broad range of activities, from the conduct of banking businesses to mortgages and general insurance. The FSA also carries out stress-testing of financial services firms.
The FSA also decides which organisations can offer accredited courses relating to the financial industry. The list for 2013, which may be added to, currently consists of:
The FSA is not paid for by the taxpayer, but is funded by a charge placed on the firms that it regulates. The amount differs for each firm, and is in relation to size and the work undertaken.
The FSA is due to be reorganised by the end of 2013, and will become two separate entities, a structure sometimes referred to as ‘twin-peak’.
The FSA is due to be reorganised by the end of 2013, and will become two separate entities, a structure sometimes referred to as ‘twin-peak’. These will be the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). Another important change is that these new organisations will have more power than the current FSA to halt immediately the selling and distribution of products that do not meet its standards. This has been described by Hector Sants, who will head the PRA, as ‘early intervention’, highlighting the new divisions’ more hands-on approach to financial services firms.
This will conduct its business as a subsidiary of the Bank of England. Its main focus will be the stability of the UK financial system, through regulation of investment banks, insurers and deposit-taking institutions. In essence, the PRA will monitor these firms’ assets and capital, and determine whether their business models are sustainable.
The work here will mainly focus on the activities of firms in the retail and wholesale banking sectors. Retail banking is the provision of financial services to consumers, while wholesale banking involves services for other banks and financial institutions. The FCA’s remit covers organisations that contribute to the structure of the retail and wholesale banking sectors as well as companies whose core business is in these areas.
In simple terms, the FCA will regulate those firms in the financial sector that do not fall under the remit of the PRA. It will monitor how firms actually interact with one another, and whether they are keeping within market rules.
A separate division, known as the Financial Policy Committee (FPA), will be based within the FCA and will have the specific remit of analysing industry-wide risks to the UK financial system, in the light of economic developments since the 2008 financial crisis.
You have to be able to build good relationships in order to work effectively for the FSA. We have teams of regulators (called ‘supervisors’) dedicated to a particular firm. Their role is to monitor firms to ensure they are complying with regulation, and challenge them on the outcomes of their actions as well as compliance with the FSA rules.
Hannah Harrison, graduate recruitment manager, FSA
All graduate schemes at the FSA, specialist and otherwise, appear to offer a base salary of £29,000. New hires are given an additional £2,500 bonus on joining. Further bonuses are performance-related and are described as ‘awards’, so may not necessarily be in cash form.
The FSA is currently going through a dynamic cultural shift. This is on account of its changing structure, with the creation of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) coming in 2013.
The main principle behind these two incoming services is to make regulation more intrusive and proactive, to ensure the economic problems of recent years are not repeated. Whereas the FSA was reactive and often took months to be able to implement its rulings, the PRA and FCA should have far more power to intervene quickly.
The work of the FSA is confidential, but this is not to say that it is secretive.
In previous years, the FSA considered its role as an advisory one, providing consumers with information and leaving it up to them to make use of it, for better or worse. Given the faults of recent years, the new approach is to provide a firmer and more direct regulatory approach to stop customers being misled by firms.
Members of staff at the FSA are a mixture of the FSA’s graduate intake at varying stages in their career progression, and experienced hires from financial organisations. More than half of the staff have been recruited from the financial industry, an unsurprising statistic given the nature of its work.
The work of the FSA is confidential, but this is not to say that it is secretive. A policy of ‘hot-desking’ is applied to encourage colleagues to mix and talk to each other, and on joining the organisations new hires can expect their first days to involve various introductions to other members of staff. Having said that, the work is classified and all paper files must be locked away once someone is done using them. The FSA therefore also employs a ‘clear-desk’ policy.
No-one at the FSA has an office, including company CEOs. As a result, colleagues are not shut away at their desks, but instead have plenty of opportunities to meet both current team members and senior staff.
The FSA is in a period of change, so right now you will get an experience that you’re unlikely to have elsewhere. The pace of change and the opportunity is second to none.
From a legal perspective, a lot of the work that we do is around enforcement, so essentially you’re investigating firms or individuals who may have broken our rules in order to ensure there is suitable deterrence against wrongdoing. Our supervisors will identify something that’s suspicious, and then pass it over to the enforcement team who investigate. Their work often makes the front pages of the newspapers, so what you deliver for the FSA is current and relevant.
What you do for the FSA is different to what you’d do elsewhere in the sector – it’s a completely unique perspective on the full spectrum of financial services.
Hannah Harrison, graduate recruitment manager, FSA
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