Financial Services Act 1986
Encyclopedia
The Financial Services Act 1986 (1986 c.60) was an Act
of the Parliament of the United Kingdom
passed by the government of Margaret Thatcher
to regulate the financial services industry. The Act used a mixture of governmental regulation and self-regulation, and created a Securities and Investments Board (SIB) presiding over various new self-regulating organisations (SROs). It was superseded by the Financial Services and Markets Act 2000
.
This relatively light approach to regulation followed a trend taking place in America under the Reagan administration.
contracts, which might be considered speculative and contrary to the Gaming Act 1845
. This exemption was not changed in the new Financial Services and Markets Act 2000
, whose section 412 (Gaming contracts) preserves the rule:
. Under this, the SIB and SROs were merged together to form the Financial Services Authority (FSA), and self-regulation took a back seat.
Acts of Parliament in the United Kingdom
An Act of Parliament in the United Kingdom is a type of legislation called primary legislation. These Acts are passed by the Parliament of the United Kingdom at Westminster, or by the Scottish Parliament at Edinburgh....
of the Parliament of the United Kingdom
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
passed by the government of Margaret Thatcher
Margaret Thatcher
Margaret Hilda Thatcher, Baroness Thatcher, was Prime Minister of the United Kingdom from 1979 to 1990...
to regulate the financial services industry. The Act used a mixture of governmental regulation and self-regulation, and created a Securities and Investments Board (SIB) presiding over various new self-regulating organisations (SROs). It was superseded by the Financial Services and Markets Act 2000
Financial Services and Markets Act 2000
The Financial Services and Markets Act 2000 is an Act of the Parliament of the United Kingdom that created the Financial Services Authority as a regulator for insurance, investment business and banking.-Outline:...
.
Context
The Act may be thought of as an “emasculated Gower”. Professor LCB Gower had been asked to produce a report on financial regulation, followed by a draft bill. He tended towards a tighter and more top-heavy regime. The Thatcher government became impatient with this process and pushed a second bill through in place of Gower with more emphasis on self-regulation but containing most of the regulatory content of the Gower bill.This relatively light approach to regulation followed a trend taking place in America under the Reagan administration.
Derivative products
The 1986 Act, s 86, abolished any oversight of the courts on derivativeDerivative
In calculus, a branch of mathematics, the derivative is a measure of how a function changes as its input changes. Loosely speaking, a derivative can be thought of as how much one quantity is changing in response to changes in some other quantity; for example, the derivative of the position of a...
contracts, which might be considered speculative and contrary to the Gaming Act 1845
Gaming Act 1845
The Gaming Act 1845 was an Act of the Parliament of the United Kingdom. The Act's principal provision was to deem a wager unenforceable as a legal contract. The Act received Royal Assent on August 8, 1845...
. This exemption was not changed in the new Financial Services and Markets Act 2000
Financial Services and Markets Act 2000
The Financial Services and Markets Act 2000 is an Act of the Parliament of the United Kingdom that created the Financial Services Authority as a regulator for insurance, investment business and banking.-Outline:...
, whose section 412 (Gaming contracts) preserves the rule:
(1) No contract to which this section applies is void or unenforceable because of– (a) Article 170 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985; or (b) any rule of the law of Scotland under which a contract by way of gaming or wagering is not legally enforceable. (2) This section applies to a contract if– (a) it is entered into by either or each party by way of business; (b) the entering into or performance of it by either party constitutes an activity of a specified kind or one which falls within a specified class of activity; and (c) it relates to an investment of a specified kind or one which falls within a specified class of investment. (3) Part II of Schedule 2 applies for the purposes of subsection (2)(c), with the references to section 22 being read as references to that subsection. (4) Nothing in Part II of Schedule 2, as applied by subsection (3), limits the power conferred by subsection (2)(c). (5) "Investment" includes any asset, right or interest. (6) "Specified" means specified in an order made by the Treasury.
Repeal
The Act was repealed on 1 December 2001 by The Financial Services and Markets Act 2000 (Consequential Amendments and Repeals) Order 2001 and was superseded by the Financial Services and Markets Act 2000Financial Services and Markets Act 2000
The Financial Services and Markets Act 2000 is an Act of the Parliament of the United Kingdom that created the Financial Services Authority as a regulator for insurance, investment business and banking.-Outline:...
. Under this, the SIB and SROs were merged together to form the Financial Services Authority (FSA), and self-regulation took a back seat.
See also
- Gower ReportGower ReportThe Gower Report into investor protection proposed regulations for the financial services industry in the United Kingdom in the late 1980s. It led to the establishment of the Securities and Investments Board, the forerunner to the Financial Services Authority.-Background:Throughout the greater part...
- Glass–Steagall Act of 1933
- Depository Institutions Deregulation and Monetary Control ActDepository Institutions Deregulation and Monetary Control ActThe Depository Institutions Deregulation and Monetary Control Act, a United States federal financial statute law passed in 1980, gave the Federal Reserve greater control over non-member banks.* It forced all banks to abide by the Fed's rules....
of 1980 - Garn–St. Germain Depository Institutions Act of 1982
- Financial Services and Markets Act 2000Financial Services and Markets Act 2000The Financial Services and Markets Act 2000 is an Act of the Parliament of the United Kingdom that created the Financial Services Authority as a regulator for insurance, investment business and banking.-Outline:...
- Financial Services AuthorityFinancial Services AuthorityThe Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...