Analysing the application of regulations

The Anglo-Saxon approach to the embodiment of policy into Capital Markets ‘functional’ regulation follows a uniform pattern: first, define the area to be regulated in terms of products and market activities in a wideranging, rather catch-all, manner; second, graft on a series, and often a large series, of relatively narrow and closely defined exceptions to be removed from the area to be regulated; third, define the territorial application of the regulations as any activity that touches the UK, subject to the overwhelming economic imperative of maintaining London as a global centre for financial markets; fourth, overlay the EU Single Market methodology (2.6); and, fifth, specify the consequences of non-compliance with the applicable regulation as, where considered appropriate, criminal, administrative and/or civil sanctions. This pattern was established in the 1986 FSAct (2.4) and continued with the implementation of the ISD. However, that Directive had a much narrower scope to regulation, and used completely different language, from the 1986 FSAct. Nonetheless, the UK Government refused to redraft the scope provisions of the 1986 FSAct or to narrow its scope, initially using a ‘general good’ argument 1, but in the end the debatable justification that ‘[t]he terminology and scope of … services [under the ISD] is not identical to those … covered by the FS [Act], although they do not represent a significant widening. It is not the Government's intention to align the definitions fully’.