Regulatory Reform of the UK Financial Services Industry
Client Alert | 2 min read | 04.03.13
For many years the principal regulator for the UK financial services industry has been the Financial Services Authority (FSA). As a result of the FSA's perceived failings during the financial crisis and subsequent recession, the FSA was this week abolished in its current form and replaced by:
- the Prudential Regulation Authority (PRA), which sits as an independent subsidiary of the Bank of England and is responsible for the regulation of financial institutions of systemic importance such as banks and building societies;
- the Financial Conduct Authority (FCA), which has inherited most of the regulatory roles previously carried out by the FSA including responsibility for the conduct of all businesses which were regulated by the FSA; and
- the Financial Policy Committee (FPC), which sits in the Bank of England and will oversee macro-economic risks as well as giving recommendations to the PRA and FCA.
PRA
Responsibility for the micro-prudential regulation of banks, insurers and major investment firms has passed from the FSA to the PRA. These types of institutions are now effectively subject to dual regulation as their conduct will be regulated by the FCA.
FCA
The FSA has effectively been renamed and rebranded as the FCA with the following three areas of responsibility:
- conduct of business supervision of banks, insurers and major investment firms (as mentioned above, these institutions will also be subject to prudential regulation by the PRA);
- conduct of business and market supervision of all regulated firms not falling within the remit of the PRA; and
- enforcement (although the PRA has the same powers as the FCA to impose penalties and fines for regulatory breaches).
FPC
Whilst the PRA is responsible for micro-prudential regulation of systemically-important institutions, the FPC has responsibility for macro-prudential regulation i.e. the monitoring and safeguarding of stability of the UK financial system as a whole. Whilst the FPC does not have direct enforcement powers over institutions, it has the power to direct the PRA and the FCA to take action against an institution where the FPC believes that this is necessary to safeguard the UK's financial stability.
Insights
Client Alert | 3 min read | 11.21.25
On November 7, 2025, in Thornton v. National Academy of Sciences, No. 25-cv-2155, 2025 WL 3123732 (D.D.C. Nov. 7, 2025), the District Court for the District of Columbia dismissed a False Claims Act (FCA) retaliation complaint on the basis that the plaintiff’s allegations that he was fired after blowing the whistle on purported illegally discriminatory use of federal funding was not sufficient to support his FCA claim. This case appears to be one of the first filed, and subsequently dismissed, following Deputy Attorney General Todd Blanche’s announcement of the creation of the Civil Rights Fraud Initiative on May 19, 2025, which “strongly encourages” private individuals to file lawsuits under the FCA relating to purportedly discriminatory and illegal use of federal funding for diversity, equity, and inclusion (DEI) initiatives in violation of Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025). In this case, the court dismissed the FCA retaliation claim and rejected the argument that an organization could violate the FCA merely by “engaging in discriminatory conduct while conducting a federally funded study.” The analysis in Thornton could be a sign of how forthcoming arguments of retaliation based on reporting allegedly fraudulent DEI activity will be analyzed in the future.
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