Financial Services Act 1986

Financial Services Act 1986

United Kingdom Parliament
Citation 1986 c.60
Territorial extent England and Wales, Scotland, Northern Ireland
Dates
Royal Assent 7 November 1986
Repealed 1 December 2001
Other legislation
Repealed by The Financial Services and Markets Act 2000 (Consequential Amendments and Repeals) Order 2001
Status: Repealed
Text of statute as originally enacted
Revised text of statute as amended

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.[1] 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 It was superseded by the Financial Services and Markets Act 2000.

Context

The Act may be thought of as an “emasculated Gower”. Professor Laurence 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.[2]

This relatively light approach to regulation followed a trend taking place in America under the Reagan administration.[3]

Derivative products

Section 63 of the Act abolished any oversight of the courts on derivative contracts, which might otherwise have been considered speculative and thus contrary to the Gaming Act 1845.[4] This exemption was not changed in the new Financial Services and Markets Act 2000, 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[5] and was superseded by the Financial Services and Markets Act 2000. Under this, the SIB and SROs were merged to form the Financial Services Authority (FSA), and self-regulation took a back seat.

See also

Notes

  1. ↑ Rider et al.
  2. ↑ Rider et al, pp. 13-18.
  3. ↑ For background see: Paul Krugman, 'Reagan Did It' (31 May 2009) New York Times
  4. ↑ Schwartz, R. J. & Smith, C. W. (1997). Derivatives Handbook: Risk Management and Control. Wiley. pp. p.183. ISBN 0471157651.
  5. ↑ "The Financial Services and Markets Act 2000 (Consequential Amendments and Repeals) Order 2001". Statutory Instrument 2001 No. 3649. Office of Public Sector Information. 9 November 2001. Retrieved 2009-10-30.

References