ABSTRACT
The Financial Services Authority (FSA) was set up by law in 2002 as the principal regulator of banks and financial institutions through the determination and drive of then Chancellor Gordon Brown. Its creation was seen as a major breakthrough in the regulation of financial services, as previously in most major financial centres, this activity was fragmented and often regulators competed with one another rather than working cooperatively. For the first time, the policing and governance of finance came under one roof. The founding chairman, Sir Howard Davies, went all over the world sharing this major breakthrough in the first year of his appointment. Although the FSA was created by law, its principal funding came from the finance industry, through a levy. This meant that it had good representation from industry in its various Boards, and the financial dependence significantly reduced its real independence from the institutions its regulated. Whilst it created a perception of tough and smart regulation, it also was very hypocritical. Politics and compromise can influence the real impact of laws, principles and rules.
