FSA Annual Report 2006/07 - Better Regulation Ltd

120
Section six – Appendices
Appendix 2
not have taken place in the absence of regulation. Measuring such effects
directly is difficult in practice, so we worked with economic consultants,
Oxera, to develop a framework for assessing them. We then followed up by
commissioning research reports into three rules: the Menu, the suitability letter,
and reduction in yield (RIY) effect of charges. The report on the Menu was
published in May and contributed to our decision to remake those rules as
Guidance. The reports on suitability letters and RIY will be published shortly.
Training and competence
In February 2007 we published proposals for a new Training and
Competence Sourcebook. It gives retail businesses greater flexibility to decide
how to achieve the required competence standards. We are proposing to
retain the sourcebook at this stage, but our longer-term aim is to remove it
altogether and rely on high-level competence requirements. This will not
happen until we are satisfied it can be done without reducing competence
standards in the industry.
Approved persons
CP06/15, which we published in August 2006, makes it clear that our
approval process is in addition to, not a substitute for appropriate checks by
employers. Our expectation is that senior managers assess, using a risk-based
approach, which combination of checks including credit references,
references from previous employers and criminal records checks are
appropriate for a particular role.
Following the publication of CP06/15, the Approved Persons Regime
(Simplification and MiFID) Instrument 2007 (Ref 2007/06) further amends
SUP 10 to include specifically that: ‘in deciding if it is necessary to carry out
a check of criminal records, the firm should consider that the FSA does not
routinely carry out these checks during the approval process.’ (Annex 1 –
Frequently Asked Questions G – 11A)
Following a commitment made in CP06/15 we are also carrying out criminal
records checks on a sample basis for applicants for approved persons status.
FSA’s use of complaints data
We are aware of the Panel’s interest in the publication of complaints data.
We will consider whether it would be desirable to publish complaints data,
including the associated costs and benefits, in the second part of this year.
General insurance effectiveness review
We welcome the Panel’s support of our review of the effectiveness of our
general insurance regime. Following talks with the Panel and other interested
parties we have decided not to remove cancellation rights for non-distance
sales to retail customers. We believe there would be no compliance cost
savings and a risk that pressure-selling models would emerge.
We acknowledge the Panel’s concern over our proposals to remove detailed
rules on product disclosure. Our research and market failure analysis found
that consumers purchasing most types of general insurance products made
limited use of documents given to them by firms. Instead, they focus on
price. We propose to replace the detailed rules on product disclosure with a