The FSA has published a speech by Clive Briault (Managing Director, Retail Markets, FSA) entitled Regulatory developments and the challenges ahead. In his speech Mr Briault discusses:

  • Current market conditions. Mr Briault states that market developments since August 2007 have exposed a number of vulnerabilities and that market conditions will remain difficult for a sustained period. Mr Briault states that the FSA’s response to this environment has been robust. It has increased its surveillance of firms and markets, and has sought to ensure that they have robust risk management, and adequate capital and liquidity in place. Mr Briault also states that the FSA responded to the market conditions by publishing Discussion Paper 07/7: Review of the liquidity requirements for banks and building societies. This sets the scene for the debate regarding the shape and content of the FSA’s future liquidity policy. He states that the FSA is trying to modernise the liquidity regime not only domestically but also at the EU and international level. The FSA is committed to publishing a Consultation Paper by the summer which will set out proposals for the new regime.
  • Principles-based regulation. Mr Briault re-affirms the FSA’s commitment to principles based regulation. He emphasises the responsibility of senior management of firms to engage with the principles and to ensure that their firms deliver outcomes that meet these high level requirements. The FSA wants the senior management of firms to develop a greater understanding of how the principles and high level requirements should apply in practice; to drive and embed change throughout their firms; and to measure that this is delivering the right outcomes. The FSA also wants to facilitate the emergence of market-led solutions, working in partnership with industry, consumer bodies and with other stakeholders, to generate outcomes that matter. The FSA will examine any further lessons that emerge from its internal review of the supervision of Northern Rock and will publish its conclusions in March 2008.
  • Treating Customers Fairly. Mr Briault states that the FSA has seen an improvement in product design processes and progress on the clarity of information in financial promotions and in mortgage and general insurance disclosures. However, the FSA is disappointed with the progress that the industry has made in delivering fair outcomes for consumers.
  • Retail Distribution Review. In this speech Mr Briault clarifies the FSA’s aims in relation to customer agreed remuneration.
  • Financial capability and the Thoresen Review. Mr Briault states that so far the FSA has had significant successes in its financial capability strategy. The FSA is half-way through its ‘Delivering Change’ plan, a five-year strategy to improve the financial capability of UK consumers, with a particular emphasis on schools, young adults and the workplace. To date the FSA has reached 2.6 million people. In relation to the Thoresen Review Mr Briault makes 2 observations. Firstly, the new generic advice service should aim to complement, and be integrated with, the National Strategy for Financial Capability. Secondly, working effectively with other organisations will be essential if the service is to deliver generic advice successfully to a wide range of people.

View FSA speech - Regulatory developments and the challenges ahead, 30 January 2008