FSA To Operate Under 'Twin Peaks' Model

As part of a regulatory reform programme, the UK Financial Services Authority ("FSA") has begun operating under a new regulatory structure since 2 April 2012: the 'twin peaks' model. This model will mean that inter alia banks, insurers and major investment firms will have two groups of supervisors. All other firms will be supervised solely by the market conduct supervisors. The Prudential Regulation Authority will focus on the safety and soundness of financials firms and the Financial Conduct Authority will regulate market conduct.

The new regulatory structure of the FSA resembles the Dutch supervision framework. Under the Dutch Financial Markets Supervision Act, two supervisory authorities are charged with supervision, similar to the twin peaks model: DNB and the AFM. The former focuses on prudential oversight, while the latter is charged with market conduct supervision.