The FSA published a paper setting out its current thinking on its move towards a more-principles-based regulatory regime. “Over the next few years we will move to more principles-based regulation”, the FSA states. “This is a continuing process, which will require significant change of behaviour by both firms and the FSA.
The paper also states that firms will have increased flexibility in how they deliver the outcomes required by the FSA. “Responsibility for key regulatory decisions will move to more senior levels, challenging firms’ compliance, risk management and internal audit functions as they provide the necessary support to senior management and Boards”, the FSA states.
However, “there are constraints on how far and how fast we can move towards principles-based regulation, including the inevitable and proper establishment of precedent by the Financial Ombudsman Service (FOS) and the current preference of the EU Commission to adopt specific rules and regulations.”
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© Graham Bishop
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