On 1 April 2013 the Financial Services Act 2012 established an independent Financial Policy Committee (FPC), a new prudential regulator as a subsidiary of the Bank, and created new responsibilities for the supervision of financial market infrastructure.
The Financial Policy Committee (FPC) contributes to the achievement of the Bank’s financial stability objective. It is charged with taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system. The Committee has a secondary objective to support the economic policy of the Government.
The Prudential Regulation Authority (PRA) is responsible for the supervision of banks, building societies and credit unions, insurers and major investment firms. In total the PRA regulates around 1,700 financial firms. The PRA has a general objective to promote the safety and soundness of these firms and – specifically for insurers – contributes to the securing of an appropriate degree of protection for policyholders.
The Bank is responsible for the supervision of key post-trade financial market infrastructures, including securities settlement systems, central counterparties, and recognised payment systems. Since financial markets rely on continuity of the services that these systems provide, the supervision of financial market infrastructures links closely with the Bank’s financial stability objective.
The PRA works alongside the Financial Conduct Authority (FCA) creating a “twin peaks” regulatory structure in the UK. The FCA is a separate institution and not part of the Bank of England. The FCA is responsible for promoting effective competition, ensuring that relevant markets function well, and for the conduct regulation of all financial services firms. This includes acting to prevent market abuse and ensuring that consumers get a fair deal from financial firms. The FCA operates the prudential regulation of those financial services firms not supervised by the PRA, such as asset managers and independent financial advisers.