The FSA have published their business plan for 2009/10.
Against a backdrop of public and governmental scrutiny, recriminations and admissions that the FSA took their eye off the regulatory ball, in particular regulatory policies and supervision on capital adequacy, not surprisingly, the FSA will focus on prudential and conduct risks, in particular the role of senior management in firms. More than ever, Senior Management Systems & Controls will be scrutinised to ensure all senior management are conversant and engaged with risk management.
Within their business plan, the FSA talk about the need to adopt a more ‘intrusive and effective regulatory approach’; to help deliver this, significant staff resource is being added, with an additional 280 people being added to the supervisory teams by the summer.
The commitment remains to principle, rather than rule based regulation, now routinely referred to as ‘outcomes focused regulation’. This is further defined as looking at the consequences of a firm’s actions. Areas of focus that are likely to be relevant to AMPS members are:
- Remuneration structures;
- Competence of Managerial/Significant Influence Functions;
- Risks of mis-selling;
- Clarity and transparency of financial promotions;
- Fairness of consumer contract terms;
- Treating Customers Fairly
Full details of the Business Plan can be found on the FSA’s website and members are urged to take some time to read this to ensure their risk mitigation strategy is aligned with the FSA’s objectives over the coming year.
Kevin Jack – Enhance Support Solutions Limited
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Clearly the main focus of this year's Business Plan from the FSA is to learn from the traumatic lessons of the past year, implement the FSA's Supervisory Enhancement Programme and improve its ability to supervise at the macro-prudential level, particularly in the case of the financial stability of banks using the new powers derived from the Banking Bill, but also of insurers with the new Solvency II framework on the horizon. At lower level, the FSA has said it will focus on strengthening its alignment of the supervisory process to identified risks, focusing on the right priorities and developing a more "outcomes-focused regulation". Key FSA developments to expect in the year ahead are the protection of client assets, review of short-selling, stress testing for insurers. There will be reviews on (a) anti-bribery and corruption systems and controls, (b) financial promotions, (c) the use of unfair contract terms, (d) concerns about weak with-profits governance, (e) improving prudential rules for personal investment firms, and (f) developing the rules for the Retail Distribution Review as well as taking forward the agenda on improving the financial capability of consumers.
Simon Laight
Partner
Pinsent Masons LLP