FSA approved firms dropped by 688 last year

The Financial Services Authority’s annual report today revealed the number of approved firms dropped by 688 to 28,281.

The number of approved persons fell by 2,455 to 164,821.

The FSA’s annual report slows the regulator levied £14.66m in financial penalties during the year compared to £17.43m last year.

Of the 74 targets the FSA set itself for 2006/07, 61 were delivered on schedule.

Callum McCarthy, chairman of the FSA, says: “2006/07 was, like other years, a busy year for the FSA.

“This reflected the final stages of some long¬standing pieces of work, including the implementation of the Markets in Financial Instruments Directive and the Capital Requirements Directive.

“The year also marked important developments in work which will continue to be central to the FSA; our work on financial capability is a prime example of this.

“At the same time, we have started a process of far-reaching changes in the way in which we run the FSA, designed to improve the quality of our output and the efficiency with which we discharge our responsibilities.

“This report sets out in some detail what we have done against our original plan. It is a plan which we have broadly delivered.”

“We continue to review our existing regulations, to see where we can eliminate regulations we judge unnecessary, or replace specific rules with reliance on principles.

“And we continue to adopt policies which are risk-¬based and proportionate.

“We accept that we cannot achieve, and that it would be counter¬productive to pursue, a zero-failure approach. Investment involves risk, and risk entails occasional failure.”

The FSA chairman says more problems lie within the retail market than in wholesale, as a result of complex products, the information flow between providers and consumers and the low levels of competency of many consumers in making financial decisions.

He adds: “We have devoted increased resources and attention to tackling those underlying problems. It will be a long haul to solve them, but we are determined to do so.”