FSA Annual Report 2006/07 - Better Regulation Ltd

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110 Section six – Appendices Appendix 2 At least seven days before publishing the results of thematic work we provide a summary of the findings, or other material, and an overview of the communications plan to the trade associations, consumer bodies and the Practitioner and Consumer Panels. In many cases we engage the Panels earlier than this. When we publish our findings we set out clearly which industry sectors are affected. We make firms that were visited in the course of thematic work aware of the results and, in almost all cases, we provide individual feedback to them. In addition to contact with individual firms we communicate the outcomes more widely through press releases, speeches and Dear CEO letters. We will continue to focus on indicating where the minimum threshold of compliance lies (for example by pointing out good and bad practice) and to make clear that going beyond the minimum standard is a matter of commercial judgement for firms’ senior management and is not a <strong>FSA</strong> requirement. All the material we publish is potentially relevant to an enforcement case. For example, it could be relevant to the question of reasonable predictability and it could inform the regulatory context at the time of the behaviour in question. Firms are not legally obliged to act on everything we say; only rules and Principles are binding. Where, however, firms reasonably rely on statements we have made in determining the approach they adopt, this will be a defence to any subsequent action we take. An expert group has been established to review continuing problems with the quality of advice, and this group includes representatives from the Practitioner and Smaller Businesses Panels. We welcome the Panel’s involvement in this work and acknowledge their concerns in this area. Through this work we intend to establish what proportion of the recommendations made to consumers are broadly suitable, or suitable for a defined range of consumer needs. We intend to design a research methodology that is credible and authoritative and results in a study which is replicable and can serve as a baseline to allow us to assess whether the quality of advice (in terms of outcomes rather than processes) is improving or deteriorating over time. If a suitable methodology can be identified and we agree to proceed with this work, we expect that it will provide valuable information on industry progress in providing suitable advice to consumers. The quality of advice work is being co-ordinated closely with the retail distribution review and mortgage effectiveness review. Financial capability We welcome the Panel’s support for our commitment to increase spending on financial capability. We recognise that improving financial capability is a major challenge and one that will take a generation to take full effect. In this context we welcome the publication in January of the government’s longterm approach to financial capability, and the government’s independent feasibility study to deliver a national approach to generic financial advice, which complement our National Strategy. As the Panel observes, changes to the school curriculum are for the government and the Qualifications and Curriculum Authority (QCA). We have liaised closely with both the QCA and the DfES on this issue. In February 20<strong>07</strong> the QCA published proposals for changes to the secondary
Section six – Appendices Appendix 2 111 school curriculum in England from September 2008. Under these proposals financial capability will have a much higher profile within the new ‘economic well-being’ programme of study. In addition QCA will give a clear signal to schools that personal finance is an important context for the teaching of mathematics. We broadly welcome the proposals. In our formal response we called for QCA to recommend to the DfES that economic well-being becomes a statutory programme of study. We consider that this is the best way to ensure that schools address financial capability and so contribute to meeting the government’s aspiration ‘that all young people have access to a planned and coherent programme of personal finance education, so that they leave school with the skills and confidence to manage their money’. We are also working closely with the relevant organisations in Scotland, Wales and Northern Ireland to make the most of opportunities to raise the profile and status of personal finance education offered by curriculum reviews currently being undertaken or implemented in these three countries. The Panel recommends that we produce a detailed prospectus in order to encourage a positive response from the regulated community. We have set extensive targets for our seven priority areas in Delivering Change, our published strategy document. We intend to re-run the baseline survey in 2010 and take into account the results of that, together with the evaluation of our programmes, in deciding our strategy for 2011/12 and beyond. Until 2011, we have committed up to £90m expenditure on financial capability. We welcome the Treasury’s indication in their recent consultation paper on unclaimed and dormant assets that they intend to use some of these resources for financial capability work in England. We hope that the devolved administrations will follow suit. International work Many of our rules derive from EC legislation; we are required to implement directives on time and in full. We add additional requirements only where there is clear market failure and the proposal is justified by cost-benefit analysis. As with all proposed rules and guidance, we also have regard to the desirability of maintaining the competitive position of the UK financial markets. As a result of research forming part of the post- implementation review of the depolarisation regime, we have decided to convert the Menu and the Initial Disclosure Document (IDD) into non-binding Guidance for firms to help them comply with directive requirements. We have therefore withdrawn the IDD and the Menu from relevant notifications made to the EU Commission. This decision illustrates our commitment to removing requirements not justified by the benefits. More generally, we have been influential both in the EU and globally in promoting risk- and evidence-based approaches to regulation. Where we believe that EU measures in particular should be principles-based we will make that case vigorously to the Commission and to other Member States.
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FSA Annual Report 2006/07 - Better Regulation Ltd

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