FSA has published a hard-hitting Business Plan for the 2009/10. In their respective forewords:
- Lord Turner highlighted:
- the fact that the financial crisis is global and has fundamental causes and is not due to deficiencies in regulatory supervision of one institution;
- but FSA is recruiting nearly 300 extra staff to intensify supervision of large systemically important firms;
- the crisis was also caused by a “wide ranging intellectual failure” in development of business models and products;
- the review on banks and bank-like institutions which is due in March and will be accompanied by a long discussion paper suggesting the changes FSA thinks necessary. The paper will focus on capital, liquidity, accounting and institutional coverage of prudential regulation; and
- the importance of domestic and international co-operation; and
- Hector Sants concentrated on specific priorities for FSA, which include:
- a clear commitment to embed fully outcomes-focused regulation in its supervisory processes;
- focusing on firms’ funding, business models and strategies to challenge how they manage risk;
- strengthening focus on TCF;
- increasing enforcement activity and penalties not least as a method of deterrence; and
- Improving the quality of its staff and increasing the resource FSA dedicates to direct supervision and the supervisory process.
The business plan looks at FSA priorities in specific areas, including:
- competence of individuals in significant influence functions;
- working internationally on robust trading and operational arrangements for OTC derivatives and CDS;
- advancing its review of client asset protection;
- working at EU level, particularly on UCITS and Solvency II;
- a thematic review of anti-bribery and corruption systems and controls; and
- an enhanced supervision strategy for small firms.
Finally, FSA’s budget will increase by 22.6 per cent to £415 million for the next year. Almost all of this relates to staff costs.
