2002 new regulatory framework

The 2002 New Regulatory Framework (NRF) was a significant overhaul of the regulatory framework for financial services in the United Kingdom. It was introduced by the Financial Services Authority (FSA) in 2002 and aimed to simplify and strengthen the regulatory regime for financial institutions.

The NRF was designed to:

  1. Simplify the regulatory framework: The NRF aimed to reduce the complexity and fragmentation of the regulatory framework, making it easier for financial institutions to understand and comply with the rules.
  2. Strengthen prudential regulation: The NRF introduced new prudential requirements for financial institutions, including capital adequacy requirements, liquidity requirements, and risk management standards.
  3. Enhance consumer protection: The NRF introduced new consumer protection measures, including the requirement for financial institutions to provide clear and transparent information to consumers, and to treat customers fairly.
  4. Improve market discipline: The NRF aimed to improve market discipline by introducing new requirements for financial institutions to disclose information about their financial condition and risk exposure.

The NRF was implemented through a series of regulations, including:

  1. The Financial Services and Markets Act 2000 (FSMA): This Act provided the legislative framework for the NRF and gave the FSA the powers to regulate financial institutions.
  2. The Financial Services Authority Rules (FSAR): These rules set out the detailed requirements for financial institutions to comply with the NRF.
  3. The Prudential Sourcebook (PSR): This sourcebook set out the prudential requirements for financial institutions, including capital adequacy requirements and risk management standards.
  4. The Conduct of Business Sourcebook (COBS): This sourcebook set out the conduct of business requirements for financial institutions, including the requirement to provide clear and transparent information to consumers.

The NRF was a significant development in the regulation of financial services in the UK and had a major impact on the financial industry. It helped to improve the stability and resilience of the financial system, and to enhance consumer protection and market discipline.