The Financial Services and Markets Act 2000 - Regulation of the insurance market

The Financial Services and Markets Act 2000 finally received the Royal Assent in June 2000, although parts of the structure established by the Act have been in place for some time in anticipation of the new regime. The 2000 Act is an ambitious piece of legislation that seeks to harmonise the regulation of all forms of financial services. The previous law was fragmented, in that different sectors were governed by different legislation (banking, insurance, friendly societies, investment contracts), and there were some sectors which were either unregulated or self-regulating (Lloyd’s, insurance brokers). Even within the regulated sector there was a combination of regulation and voluntary self-regulation (the Insurance Ombudsman Bureau scheme). The 2000 Act took the best part of two years to clear Parliament, and has been the subject of major consultation and countless amendments in the legislative process. The Act runs to 433 sections and 22 schedules but much of the detail is to be contained in secondary legislation which has yet to appear. The Act is not yet in force, and will be brought into force piece by piece over what is likely to be a fairly lengthy period. The following paragraphs contain a summary of the most important features of the new legislation as it relates to the insurance market. Much of the Act is of no direct significance to insurance, eg, the provisions on official listing (ss 72 to 103), market abuse in relation to traded investments (ss 118 to 131), collective investment schemes (ss 235 to 284), and investment exchanges and clearing houses (ss 285 to 313).