The FSA has published the second edition of its IRO. (See: International Regulatory Outlook). The IRO is an overview of topical issues in international regulation written by the FSA in an easy, understandable form. This edition of the IRO covers four areas, which are summarised below.

1. "Evolution or revolution in European financial services regulation?"

This article discusses whether there is a case for institutional reform in European financial services regulation. In particular, considers the arrangements for financial services supervision in the EU.

As discussed in our previous blog, (see: The FSA calls for increased co-operation in Europe), the concept of colleges in Europe is key to the ongoing discussions on the future structure of financial services regulation. The creation of colleges of supervisors is intended to improve dialogue between EU regulators. The UK Government has proposed that these colleges operate for all significant EU cross-border financial institutions, irrespective of legal form, and provide a structure for the sharing of information and the cooperation of supervisory authorities in the EU. The FSA's view is that colleges are clearly the way forward for the supervision of financial services.

The FSA also outlines some of the current radical reforms that are being proposed by some parts of the industry and sets out its view on these. The FSA believes that radical changes such as the creation of a single European level financial services regulator, a common European rule book or radical reform of the Level 3 committees (CESR, CEBS and CEIOPS) are not workable solutions.

2. "The practical operation of colleges"

This article looks at the practical arrangements the FSA has put in place to facilitate the day-to-day supervision of major international groups through colleges.

3. "Colleges and cross-border stability groups"

This article considers how the proposed regulatory colleges might function. In particular the article includes a discussion of how ongoing regulatory colleges might differ from crisis-management colleges or cross-border stability groups.

4. "Our international policy approach to credit-rating agencies"

Finally, the IRO also contains a fourth article which reflects on another issue which has gained importance since the mass downgrades of US subprime-backed securities - the role of credit rating agencies (CRAs). The FSA discusses the background of CRAs, the regulatory and industry concerns relating to CRAs, what is being done now to address these concerns, as well as its view on the future role of CRAs.

For further information on the first edition of the IRO, please see our previous blog:

Response to European Commission consultation on the responsibilities of the European insurance supervisors' committee