Abstract:
This paper intends to discuss if the Financial Services Authority (FSA) has an ethical approach in relation to investment regulation. First it will explain the recent history of regulation within the Financial Services Industry until the creation of the FSA , an independent and non-governmental body, with statutory rights given by the Financial Services and Markets Act 2000. Then it reflects about the meaning of compliance competent and if FSA had adopted an ethical approach.
In the beginning...
The story of the FSA is quite recent and it started from the need to regulate and control the rapidly changing markets of the 70’s and 80’s. Prior to the FSA, the market regulation was served ad hoc, combining government regulation and a heavy element of self regulation. Changes in the international financial system made the Government to look for new solutions and at that time Professor L.C.B. Gower was asked to review the investor protection within the financial services industry in the UK.
In his report, Professor Gower wrote that ” Logic and tidiness... are important only in so far as they contribute to a legal regime which can be understood, which will be regarded as fair by those which affects and which, as a result, will be generally observed and can be effectively enforced.” (Budd, L., Whimster, S., 1992)
A White Paper in 1984 followed the report and led to the Financial and Services Act (FSA) 1986. This act is mainly concerned with protecting the private investor and is a piece of legislation that brings sole practitioners and firms of the financial industry within one statutory framework.
With the FSA 1986 was created an agency, the Securities and Investment Board (SIB), with regulatory and enforcement powers and where most of the powers under the act were delegated. The SIB was assisted by self-regulating organisations (SROs) such as FIMBRA and LAUTRO and recognised professional bodies (RPBs). The SIB had power to make rules with legislated effect and reported to the Chancellor of the Exchequer. It maintains a list of authorised firms called the central register.
Unlikely its American counterpart SEC, the SIB was totally financed by the city but accountable not to the city but to the government (Budd, L., Whimster, S., 1992).
The Financial and Services Act 1986 was replaced by the Financial Services and Markets Act 2000. The SIB was replaced by the Financial Services Authority (FSA), and all the SRO’s were incorporated into this single regulator.
FIRREA abolished the FSLIC and transferred its assets, liabilities and operations to the newly created FRF, Federal Resolution Fund, to be administered by the FDIC. The remainders of the monies were from the US Treasury and the Federal Home Loan Banks.
Given the complex nature of the financial markets they should be regulated primarily by the SEC. Additionally since there is specific legislation enacted to regulate these markets, and then the SEC’s oversight should be the standard to which the stakeholders are held.
Basically FINRA plays police officer for the SEC. FINRA (2014) investigates complaints brought about by those who feel they ...
The Dodd-Frank Wall Street Reform and Consumer Protection Act brought the most significant changes to financial regulation in the United States since the reform that followed the Great Depression. It made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation’s financial services industry. Like Glass-Steagall, the legislation passed after the Great Depression, it sought to regulate the financial markets and make another economic crisis less likely. Banks were deregulated in 1999 by the Gramm-Leach-Biley Act, which repealed the Glass-Steagall Act and essentially allowed for the excessive risk taken on by banks that caused the most recent financial crisis. The Financial Stability Oversight Council was established through the Dodd-Frank Wall Street Reform and Consumer Protection Act and was created to address the systemic risks in the United States financial system and to improve coordination among financial regulators.
Through the number of projects undertaken, we can see that there was a push for the development of a proper financial body. From 1966, the first set of CFs were developed from the joint actions of the Australian Accounting Research Foundation (AARF) and the Public Sector Accounting Standards Board (PSASB)
Verschoor, CMA, Curtis C. "Ethics: Do The Right Thing." Strategic Finance (2006). Retrieved on 18 September 2006 .
The author starts by explaining how the government got involved with the financial sector by
...Security Agency (FSA) was created. The FSA was comprised of SSB, the Public Health Service, the Office of Education, the Civilian Conservation Corps and the U.S. Employment Service. In 1946, the SSB was replaced by the Social Security Administration, with one commissioner. In 1953, President Eisenhower eliminated the FSA. He the created a new Department of Health, Education and Welfare (HEW) in which, Social Security was made part of. In 1994legislation was passed making Social Security an independent agency again (Social Security: A Brief History, 2005, p. 27-28).
The Federal Security Agency (FSA) was established in the 1940’s and included a Public Health Service (PHS) department. After World War II, major program changes resulted in expanded services and stronger legislation. After the separate of the Education and Health and Human Services departments, the HSS become an independent agency. In fact, special agents who work for the Office of Inspector General (OIG) are empowered to investigate crimes for the HSS. These special agents typically investigate white collar crime, such as Medicare fraud.
There is a constant flow of cash and funds through the financial system due to the financial institutions as they assist money movement among the borrowers and lenders (lecture notes, chapter 8, 9, 15) a financial institution is basically a firm like a bank which acts as a safe house for depositors to keep their money and also provide loan with interest to others and this how they expand the institution. This is the basic concept of the way the economics works in a country and also how a bank functions. All the banks are connected to one another and if there is a problem in one of the banks the bank looses it image in the minds of the people and if it’s a big problem it can cause disaster within the financial system of the country and this can only be caused due to shortage of liquid cash. To have a proficient system the bank has to be sure to be liquid to avoid any problems. (Chapter 1) To help avoid this problem the government lays down regulations for the banks through prudential supervision (Chapter 2). The Australian regulatory power is Australian Prudential Regulation Authority (APRA), whereas in Singapore it is Monetary Authority of Singapore (MAS). The key concept of their job is to assure the people that their money is in safe hands. Keeping the capital safe is essential as it assists the bank to expand and help them pay off any debts when needed (Chapter 2). In context to if there is an emergency as the government has some control on the banks it asks them to keep some money on the ...
The English legal system is ostensibly embedded on a foundation of a ‘high degree of certainty with adaptability’ based on a steady ‘mode’ of legal reasoning. This rests on four propositions
The international professional activities of the accountancy bodies were organized under the International Federation of Accountants (IFAC) in 1977. In 1981, IASC and IFAC agreed that IASC would have full and complete autonomy in setting international accounting standards and in publishing discussion documents on international accounting issues. At the same time, all members of IFAC became members of IASC. This membership link was discontinued in May 2000 when IASC's Constitution was changed as part of the reorganization of IASC.
Required: Identify and explain (in your own words) the key requirements that an auditor must follow in order to meet the “reasonable skill, care and caution” criteria in an audit of a Financial Market Conduct (FMC) reporting entity in New Zealand. Provide appropriate references.
Mozes, HA 2002, ‘The FASB’s conceptual framework and political support: the lesson from employee stock options’, A Journal of Accounting, Finance and Business Studies, vol. 34, issue. 2, pp. 141-161, viewed 30 April 2014, Wiley Online Library Database, DOI 10/1111/1467-6281.00027
The third organization that helps to regulate the accounting standards is the IASB. “Our mission is to develop, in the public interest, a single set of high quality, understandable and international financial reporting standards (IFRSs) for general purpose financial statements”(IASB 2008,¶ 1). The IASB consists of a board that is made up from nine different countries with the sole purpose of expanding accounting standards. Their main hope and goal is to one day that there will be only one set of accounting standards that will be used throughout the world.