FSA report reveals risks of financial crisis

The Financial Services Authority has published a report into what risks the economic downturn poses for firms, consumers, and the regulator itself.

The Financial Risk Outlook will be available on the FSA website this afternoon and will outline the challenges ahead as the recession begins to bite.

It addresses the need for banks to change their business models to reflect deteriorating market conditions as well as reminding firms to adhere to principles of Treating Customers Fairly, particularly for clients who struggling financially.

The FRO for this year is divided into three sections.

A section looking at the financial and economic crisis places the current market conditions into context to explain the financial and regulatory background behind the crisis.

The report also focuses on ‘economic outlook’, which describes how attempts to deleverage and reduce debt will affect the market.

Finally, the FRO contains a section on ‘outlook for financial sectors and consumers,’ identifying the inherent risks of the financial and economic environment.

A statement from the FSA reads: “By publishing this document the FSA seeks to raise awareness of the key issues facing it and the regulated industry and to place the actions and decisions the FSA makes in context.”

The report will contribute to the way the FSA sets its agenda for the year.

This will be published as part of its business plan on February 12.