M1 - explain reasons why recent UK & EU legislation and regulatory decisions may be likely to inspire investor confidence in the UK financial services industry
In the financial services industry, it is key to make sure that the customers and investors have confidence in what they are taking part in. The financial world has not got a very good reputation at the moment thanks to scandals that have happened in the past which have caused huge problems mainly for investors and customers – for example with Bernie Madoff who lost a ridiculous amount of money because he kept investing to try and cover up his ever rising amount of debt.
Thankfully for financial services, the FSA (financial services ...view middle of the document...
However, in today’s day and age, there are the PRA and the FCA. The PRA – Prudential Regulation Authority – was created with two purposes – to promote safety of financial institutions especially insurers and also to secure protection for policyholders. This means that the PRA are in charge of the securities in the financial sector, as this is their two objectives. This has replaced the FSA’s security measurements and made them more specific and a lot stronger. (Wikipedia, Prudential Regulation Authority (United Kingdom) - Wikipedia, the free encyclopedia, 2014)
The FCA – Financial Conduct Authority – regulates the financial institutions in the United Kingdom. It doesn’t work with the UK government, and it gets its money from charging the financial institutions that are in the UK. The FCA provides services to maintain the integrity of the financial services and markets in the UK – it is mainly for retail and wholesale finance services. (Wikipedia, Financial Conduct Authority - Wikipedia, the free encyclopedia, 2014)
The financial services do have ways of becoming stronger again and gaining back the confidence from their customers – for example when Northern Rock went bust, a reliable and well known company - Virgin – came in and bought it outright, clearing all the debts and converting it to one of their banks. It is now working normally again like Northern Rock was before the financial collapse.
These changes allowed the financial world to be safer and secure – the financial market in the UK is very fragile at this moment in time as it is still recovering from the disaster of the credit crunch in 2008. As many people know, because of the credit crunch, these measures were put into place to make sure that customers know that they can rely on the institution that they bank with because nothing is worse than losing all of your hard earned money and you cannot get it back.
The consumer protection act was introduced in 1978 – it was introduced to protect people who have purchased products that were damaged and to respect things such as prices. The consumer protection act is very useful for a customer – this is most likely where the term “the customer is always right” comes from, because they are covered and protected by this act. For example, if someone purchases a television but it is faulty, then the place they purchased it from have to either give a refund or replace the faulty item.
The consumer protection act amended some acts that were made previous to 1978, for example it amended part 1 of the Health and Safety at Work act of 1974. This made sure that employees were protected as well, as they were able to work under suitable and safe conditions in their work environment.
The consumer protection act inspires huge confidence in the market today. Many people know that if they buy something and it is broken that it can be solved very quickly and easily – very often is there hassle when sorting out such a dilemma, however there...