FSA Annual Report 2006/07 - Better Regulation Ltd
FSA Annual Report 2006/07 - Better Regulation Ltd
FSA Annual Report 2006/07 - Better Regulation Ltd
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106<br />
Section six – Appendices<br />
Appendix 2<br />
It is also, of course, important that firms and their advisers are able to access<br />
and stay abreast of our statements and publications; as we have previously<br />
announced, we are working to deliver new technological solutions that will<br />
enable them to do this.<br />
We recognise that as we introduce more high-level rules into our Handbook<br />
some industry groups may wish to produce their own supplementary<br />
guidance. In our view it is for the industry to initiate and drive the<br />
production of any such material. In September 20<strong>07</strong> we will publish a Policy<br />
Statement setting out our future approach on industry guidance; we believe<br />
this will address many of the Practitioner Panel’s concerns. We agree with the<br />
Panel on many aspects of the use of such guidance; complying with it must<br />
be voluntary, and we acknowledge the resource implications for trade<br />
associations of producing this material. It is of course not the role of trade<br />
associations to monitor compliance with guidance. We agree that we must<br />
explain clearly to firms the status and meaning of our confirmation of<br />
industry guidance.<br />
One of the topics we discussed in some depth at the recent conference, and<br />
which will be discussed in more detail in our proposed Enforcement Guide<br />
on which we have recently consulted, is the role of enforcement in a more<br />
principles-based regime. Concerns have been expressed about the impact that<br />
enforcement actions may have in a less prescriptive, more principles-based<br />
environment. We are not looking to trip firms up; we take account of a firm’s<br />
behaviour and its positive engagement with desired regulatory outcomes<br />
when considering the most appropriate course of action. We cannot use<br />
hindsight or apply later, higher standards retrospectively when deciding<br />
whether to take enforcement action. We acknowledge that when we publish<br />
details of our enforcement decisions in cases based on breach of Principles<br />
only, we must explain clearly the basis on which we took action, and we<br />
must ensure that our application of the Principles is consistent.<br />
We maintain a dialogue with the FOS about principles-based regulation and<br />
about industry guidance in particular, and we will say more about this in our<br />
September Policy Statement. Where a FOS decision has a wider application<br />
we work proactively with the ombudsman service within the framework of<br />
the ‘wider implications’ process.<br />
Costs of regulation<br />
The Deloitte cost of regulation report, published in June <strong>2006</strong>, encouragingly<br />
confirmed that much of what regulation requires is good business practice.<br />
As the Panel notes, most of the rules identified as imposing the highest<br />
incremental costs were in the retail investment and pension advice sector, and<br />
related to point of sale disclosure. Alongside the Deloitte report we published<br />
a progress report on our <strong>Better</strong> <strong>Regulation</strong> Action Plan. This included our<br />
plans to use the results of the Deloitte study to assess the benefits of the<br />
regulatory requirements that generate the highest incremental costs (and that,<br />
for example, are not required to remain in place as part of the<br />
implementation of a Directive). By the end of 2008 we expect to have<br />
reviewed rules giving rise to over 80% of the administrative regulatory costs<br />
identified in our studies.