FSA to slash rulebook in half

The Financial Services Authority has pledged to cut its rulebook in half to make rules easier to understand in line with its principles-based approach.

The FSA will remove around half the content of the Conduct of Business rulebook and launch NEWCOB at the same time as implementing provisions of the Markets in Financial Instruments Directive.

NEWCOB will replace COB from November 1 2007, as MiFID comes into effect across the UK and the European Union.

Dan Waters, director of retail policy at the FSA, says: “The move towards principles-based regulation means focussing on outcomes rather than on procedural box-ticking.

“It also gives firms the flexibility to achieve those outcomes in the context of their business models. It fits with the emphasis we place on senior management responsibility – a core FSA principle of good regulation.

“NEWCOB’s messages will be easier to understand and so easier to comply with, thereby helping firms to treat their customers fairly in line with a core principle of ours. But principles-based regulation does not mean relaxing the standards we expect.”

Jonathan Burridge, managing director of Quantum Mortgage Brokers, says: “Regulation has a positive influence as it defines best practice, helps develop professionalism and improves consumer confidence. But it is commonly thought that the present environment is unnecessarily arduous, particularly for smaller firms.”

Last week it was also reported that the FSA is planning to shrink its workforce as part of its move towards principles-based regulation. The FSA declined to comment.