The Financial Services Authority (FSA) has published a paper setting out its current thinking on its move towards a more-principles-based regulatory regime.
The paper, entitled “Principles-based regulation - focusing on the outcomes that matter”, accompanies a conference also being held today at which FSA senior management, financial services industry leaders and other interested parties debate the challenges and opportunities presented by a move away from more detailed rules to a principles-based environment.
Callum McCarthy, chairman of the FSA, said: “We have set ourselves and the industry on a course towards more-principles based regulation. We are pursuing this with determination, but recognise there are difficult issues as well as excellent opportunities for us as a regulator, the industry and consumers.”
John Tiner, chief executive of the FSA, said: “Financial services markets are dynamic and innovative. To be effective, regulators must be able to adapt their regimes to keep pace with market changes. We believe principles which focus on an outcome are more enduring while at the same time better foster innovation and competition.
“More principles based regulation is the natural next step in the evolution of our regulatory system. It will give firms more choice over how they meet our requirements bringing for many a closer fit with their business processes and more clearly placing the responsibility for key regulatory decisions at more senior levels in firms.
To help firms the FSA will provide, either directly or through confirmation of industry guidance, a greater range of clearly sign-posted information to enable firms to plan their business processes and controls with confidence.