The FSA has put enforcement at the top of its agenda for 2003 and 2004, alongside a commitment to pick up potential mis-selling scandals faster.
The regulator envisages a 3.1% increase in expenditure next year to fund developments, including an increase in the enforcement team and extra resources channelled to influencing European policy-making.
Howard Davies, chairman of the FSA, says: “Our first 12 months of operation as the single statutory regulator coincided with some of the most difficult conditions experienced in financial markets in living memory.
“Our proactive risk-based approach to regulation has also helped us identify five particular areas where we believe we need to apply more resource next year.”
First up is enforcement, described as a “key task” for the FSA and one to be given extra resrouces in the coming year.
Consumer intelligence is another priority. Davies says: “We will do more to pick up potential threats to consumers earlier, such as exaggerated claims in financial promotions or from undisclosed product risks, and to respond to these quickly and effectively.
“We therefore plan to devote more resource to monitoring the retail markets, to analysing new products and the financial promotions which go with them, and to proactive policing of such promotions.”
The regulator must also keep an eye on international regulatory developments. UK regulation is increasingly driven by developments in the European Union – including the forthcoming directive to implement the revised Basle Accord.
The FSA also plans to increase resources in the Listing Authority after concerns that existing Listing rules may fail to highlight risks for investors in certain types of prospectus. The extra funding should improve linkages between the Listing Authority and other parts of the FSA.
The FSA is continuing its drive on consumer education. Davies says: “The Sandler Report recommended a step change in the resources we devote to our consumer work. We will be increasing our expenditure in this area next year, working as far as possible in partnership with others, particularly financial themselves
“We recognise the need for more public awareness activity on consumer borrowing and debt and our consumer education and information materials will tackle these issues.”
Davies says the cost of meeting FSA priorities will be offset by efficiency savings made in 2002, and insists the net effect is a budget for 2003/04 which is only slightly higher in real terms than last year.
He says: “We hope that the overall balance of effort we propose for the coming year will be seen as a reasonable judgement by both the industry and consumers.”