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Principles Based Regulations - Here To Stay |
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 Speaking at an FSA conference for retail financial services firms today, Hector Sants, chief executive of the regulator, insisted that recent market turbulence and the problems at Northern Rock would not deflect its commitment to its principles-based regime.
He says: "We believe that these times of turbulent markets reinforce the importance for both the regulator, and the industry, to focus on the outcomes and consequence of actions. We are, and will remain, a risk-based and evidence-based regulator."
Sants acknowledges that the economic outlook remains challenging and says this is likely to remain the case while investor confidence remains low. He told delegates that they should be preparing for this different environment, adding that they should be considering the implications of both short and long-term market risks for their businesses. He says: "You should not seek to divert your attention away from focusing on conduct of business requirements and our high level principles. In particular, you will need to continue the focus on treating customers fairly and to tackling areas of financial crime.
"Senior management should engage to a greater extent to ensure that firms are making the right judgements in delivering the outcomes we want to achieve."
Sants also highlighted the importance of the FSA learning from its handling of the Northern Rock debacle.
He says: "I commissioned an internal review of our supervision of Northern Rock in the period up to July last year. We have committed to publishing the conclusions next month. I can now say it will show that the supervision of the company did not meet the standards I would expect of the FSA, although I should also say that it is by no means necessarily the case that more active supervision on our part would have prevented what later occurred.
"That said, being prepared to examine ourselves and learn from our mistakes, in my view, is a crucial characteristic of a successful organisation. Successful organisations have a learning culture and an institution which expresses infallibility is not one to trust. I would thus like to think that our determination to be open and proactive should be seen as being to our credit and help give confidence to industry and consumers. To that end, I want to assure you that we will act decisively to address the shortcomings that emerge from the review." Source: Mortgage Strategy |
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