FSA Annual Report 2006/07 - Better Regulation Ltd

Section six – Appendices
Appendix 2
105
Appendix 2: Accountability
The FSA’s response to the Practitioner,
Smaller Businesses Practitioner and Consumer Panels
Response to the Annual Report for 2006/07
of the Practitioner Panel
Introduction
In its Annual Report for 2006/07 the Panel comments on a range of our
policies, plans and activities. We welcome the Panel’s support for particular
aspects of our work, including more principles-based regulation and financial
capability. In this response we focus on those topics on which the Panel
expresses concerns or criticism.
More principles-based regulation
We welcome the Panel’s support for our move to more principles-based
regulation. We agree that this approach will pose challenges – both for our
people and the industry – and we have been working throughout the year
with our stakeholders to address these. One of our key priorities has been to
articulate clearly what a more principles-based regime means and the actions
needed to get there. As the Panel notes, in April we published a paper to
explore the challenges and opportunities for us as a regulator, the industry
and consumers.
We agree that in a more principles-based environment it will be important
for our people to make judgements about whether a firm meets our
requirements in the outcomes it delivers. One of the ways we are addressing
this is by developing a knowledge management strategy for the efficient and
effective use of the information we hold throughout the organisation. As the
Panel has acknowledged, we are also taking steps to improve the
effectiveness of our people. This includes increasing our spending on training
and development, and continuing to recruit people with direct experience of
the financial services industry.
One way in which we can help firms understand what principles-based
regulation means in practice is to publish examples of practices we do and
do not consider meet our high-level requirements. We recognise that the
status of our materials must be clear. As we have explained, whether we
publish material in our Handbook or as less formal supporting material does
not affect the extent to which a firm can rely on the material. Rather, it is a
factor in our own consideration of how much reliance to place on the
material.