As we have previously discussed, the UK Financial Services Authority (the “FSA”) signalled a sea change in the way retail financial products will be regulated in the UK in its Discussion Paper on product intervention published in January 2011 (the “Discussion Paper”). In the Discussion Paper, the FSA stated that its existing regulatory approach had not prevented a series of product failures leading to significant customer detriment. It therefore proposed a much more interventionist and intrusive approach to regulation in this area involving earlier regulatory intervention and subjecting firms to greater supervisory and enforcement focus. In its recent Feedback Statement published in June 2011, the FSA provides a summary of the feedback from the 84 responses it received and its proposed next steps. The FSA is in the process of being broken up and its functions will be transferred to new bodies. In the context of product regulation, most of the relevant functions of the FSA will be transferred to the new Financial Conduct

Authority (the “FCA”), which will have responsibility for regulating how firms conduct their business, with the objectives of securing an appropriate degree of protection for consumers, promoting efficiency and choice in the financial services market and protecting and enhancing the integrity of the UK financial system. In June 2011, HM Treasury published a White Paper and accompanying draft Bill4 setting out the proposed framework for the new regulatory regime. At around the same time, the FSA also published a discussion paper setting out its proposals for the approach to regulation by the FCA and which therefore ties in with the more interventionist approach to product regulation referred to above.