The UK Financial Services Authority (FSA) published its 2007-2008 Business Plan on February 6. The plan sets out FSA’s priorities for the coming year and emphasizes that FSA’s main strategic priority will be its “drive towards more principles-based regulation.” Achieving this objective will require significant changes to the FSA’s rules and the way it explains its regulatory requirements, as well as to its staff’s skills and FSA’s information systems.

The Business Plan includes FSA’s full program of work and how it will be funded, including substantial additional spending on IT infrastructure. FSA’s budget will rise by 10.1% (£27.6 million) from 2006-2007. This will be funded by increased fees for FSA regulated firms.

FSA’s three strategic aims continue to be: (i) promoting efficient, orderly and fair markets; (ii) helping retail consumers achieve a fair deal; and (iii) improving business capability and effectiveness. The majority of FSA’s work in the coming year will be dealing with the implementation of the EU Markets in Financial Instruments Directive and the EU Capital Requirements Directive. FSA will also continue to be focus on themes such as Treating Customers Fairly, retail distribution, payment protection insurance and commission transparency in the insurance sector.

FSA remains committed to increasing efforts to prevent, detect and prosecute market abuse and other forms of financial crime. Enforcement action will continue to be an important strategic tool in supporting FSA’s supervisory, thematic and market-monitoring activities. Internationally, FSA is planning to develop its relationship further with US regulatory authorities, including tests on handling financial crises which might affect both UK and US financial institutions and markets.