The FSA has published a speech by Philip Robinson (FSA Financial Crime & Intelligence Division Director) entitled Financial crime and market stability. In his speech Mr Robinson covers:
- The FSA’s risk-based approach to regulation.
- Market abuse.
- Mortgage fraud.
- Tools the FSA have to measure financial crime.
At the start of his speech Mr Robinson states that the FSA believes that the risk-based approach is still the right way to regulate the UK’s financial system. The risk-based approach offers both the FSA and firms sufficient flexibility to rapidly adjust their focus to tackle new and emerging risks.
Mr Robinson states that market abuse continues to be one of the FSA’s top priorities. The FSA will use all of its powers – civil, criminal and administrative - to tackle market abuse and insider dealing cases. This year the FSA has brought three criminal prosecutions for insider dealing, and Mr Robinson anticipates that there will be more to come.
Mr Robinson then focuses on mortgage fraud. He states that easy credit conditions and streamlined application processes have prompted fraudsters to target the mortgage sector. To resolve this, the FSA is working across the industry to strengthen the defences against fraud, especially closer investigatory and intelligence relationships between FSA supervisory and regulatory colleagues. The FSA is also currently working with over a dozen local police forces and national law enforcement agencies, to ensure a consistent development of multi-agency solutions.
Mr Robinson briefly discusses the ‘information from lenders’ project which was introduced by the FSA and the Council for Mortgage Lenders (CML). The project was set up to ensure the effective use of the intelligence that lenders hold on the brokers they deal with. The project allows the FSA to target its supervisory and enforcement resources on those who bring the industry into disrepute. The project is complemented by CML’s measure to improve intra-industry intelligence sharing.
Mr Robinson emphasises the importance of cross industry engagement, stating that the FSA has planned targeted visits to 200 mortgage advisors to examine their systems and controls around mortgage fraud. The FSA will also review whether it needs to make brokers individually accountable under its Approved Persons regime, as it relates to the mortgage market.
Mr Robinson states that the cornerstone of the FSA’s risk-based approach is the idea that it should focus its resources where they will have the most effect. The FSA believes that effective anti-financial crime systems and controls in firms can make it significantly harder for criminals to access the financial system.
Mr Robinson refers to an FSA project known as the “Scale and Impact” project. This project is used to assess the scale and incidence of different types of financial crime, together with their impact on the UK. The FSA is interested to know which type of fraud has the greatest impact on society at large – individuals, businesses, or society’s underlying infrastructure. The FSA believes that the results of the project will allow it to better allocate its resources, so that regulation has a greater effect on tackling financial crime. The FSA has also been working with academics to review all published work on financial crime and after this review is completed the FSA will stimulate analysis and debate.
View FSA speech - Financial crime and market stability, 3 September 2008