FSA heralds tougher supervision
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The Financial Services Authority says that over the coming year the regulator will become more confrontational, larger, and more expensive.
The regulator has today published its Business Plan setting out its priorities for 2010/11.
It reveals that the FSA is hiring an additional 460 staff this year, which has helped push up the annual cost for firms by 9.9%.
The FSA says that 4% of this annual increase is also due the supervisory enhancement programme the regulator started last year.
Hector Sants, chief executive of the FSA, says: “Intensive supervision is inherently more confrontational.
“Our supervisors are making judgements both about the robustness of the business models of firms and the suitability of the products they are selling. We will then intervene promptly if we anticipate problems.
“This proactive approach to supervision requires significantly more people than the old reactive model and those individuals must be of a higher quality and supported by more sophisticated systems.
“If society wants a more proactive approach it must accept that it will have a larger and more expensive regulator.”
Last week Sants outlined the regulator’s plans to take a more pro-active approach, in particular by intervening in product design before problems emerge rather than when questionable products have already been sold.
Tim Dolan used to work with the FSA’s enforcement division and is now a partner in the financial services team at law firm Pinsent Masons.
He says: “The FSA’s change in approach has direct implications for all firms which are authorised by the FSA.
“They have to be prepared for the FSA to be more difficult and more demanding.
“Firms will need to ensure that both their compliance teams and their senior management are capable of dealing with a more demanding regulator.
“Firms will also have to allow more time for transactions which require FSA approval.”
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Readers' comments (4)
Robin Banks | 17 Mar 2010 2:08 pm
Empire Building, typical of government departments and public sector. A 9.9% increase in costs, who would want to be in the Financial Services Sector and who exactly is controlling the FSA?
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Anonymous | 17 Mar 2010 3:04 pm
The suitability of products starts with the provider producing a product to meet individual needs of its customers that is both transparent in its description and fair in its design. It is the adviser's role to advise on the product's suitability to an individual customer's financial planning requirements. The adviser does not create the suitability of any particular product and by the way Mr Saints just in case you have not noticed, the majority of IFAs sell their expertise not products!
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Anonymous | 17 Mar 2010 3:28 pm
"Society wants a more proactive approach and a more expensive regulator"! Quotes Sants.
What is needed is a "fair and balanced common sense approach that assists both Clients,Brokers & Lenders alike". Not a regulator with a big stick and a one track mind. I'm all for fair and balance regulation, the FSA should work with the industry not against it!
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Anonymous | 17 Mar 2010 3:40 pm
Last week the FSA woke up to the idea in not so many words that the suitability of products started with the provider producing a product to meet individual needs of its customers that is both transparent in its description and fair in its design. It is the adviser's role to advise on the product's suitability to an individual customer's financial planning requirements. The adviser does not create the suitability of any particular product and by the way Mr Sants just in case you have not noticed, advisers sell their expertise not products!
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