Last amended by Financial Services and Markets Act 2023 in 2023. Adapted the UK regulatory framework post-Brexit, giving regulators power to replace retained EU financial services law.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Summary
The Financial Services and Markets Act 2000 (FSMA) is the principal statute governing the regulation of financial services in the United Kingdom. It established the Financial Services Authority (now replaced by the FCA and PRA) and provides the regulatory framework for authorisation, supervision, and enforcement of firms carrying on regulated activities.
Key Points
- General prohibition: no person may carry on a regulated activity unless authorised or exempt (s.19)
- Financial promotion restriction: communications inviting or inducing engagement in investment activity must be approved by an authorised person (s.21)
- The FCA and PRA have rule-making, enforcement, and disciplinary powers
- Market abuse regime: civil and criminal sanctions for insider dealing and market manipulation
- Financial Ombudsman Service established for consumer complaints (Part XVI)
- Financial Services Compensation Scheme for failed firms (Part XV)
- General prohibition on unauthorised regulated activities
- FCA and PRA regulatory framework
- Financial Services Compensation Scheme
- Market abuse regime
Parts & Sections
Amendments History
2012 — Financial Services Act 2012
Replaced the FSA with the FCA and PRA twin-peak regulatory system.
2023 — Financial Services and Markets Act 2023
Adapted the UK regulatory framework post-Brexit, giving regulators power to replace retained EU financial services law.
2012 — Financial Services Act 2012
Replaced the FSA with the FCA and PRA twin-peaks model.
2023 — Financial Services and Markets Act 2023
Post-Brexit reforms to the regulatory framework.
Frequently asked questions
- What is the main purpose of the Financial Services and Markets Act 2000?
- The Financial Services and Markets Act 2000 is the principal statute governing financial services regulation in the UK. It provides the framework for authorising, supervising, and enforcing firms that carry out regulated activities. Originally, it established the Financial Services Authority, which has since been replaced by the Financial Conduct Authority and the Prudential Regulation Authority.
- What are the rules regarding financial promotions and investment invitations?
- Section 21 restricts financial promotions. A person must not communicate an invitation or inducement to engage in investment activity in the course of business unless the communication is made or approved by an authorised person. This prevents unregulated entities from marketing investment products to consumers.
- What are the roles of the FCA and the PRA?
- The Financial Conduct Authority focuses on consumer protection, market integrity, and effective competition. The Prudential Regulation Authority, which is part of the Bank of England, aims to promote the safety and soundness of authorised firms. Both bodies have rule-making, enforcement, and disciplinary powers under the Act.
- What protections exist for consumers if a financial firm fails or misbehaves?
- The Act establishes the Financial Services Compensation Scheme to protect consumers if a firm fails. It also sets up the Financial Ombudsman Service to handle consumer complaints. Additionally, it includes a market abuse regime with civil and criminal sanctions for insider dealing and market manipulation.