Press Release - The Financial Services Authority: A
Review under Section 12 of the Financial Services and Markets Act
2000
30 April 2007
Five years after its creation the Financial Services Authority,
the independent body regulating the financial services industry in
the UK, is a well-established regulator with an impressive set of
processes and structures to help tackle high-risk organisations and
markets. It now needs to streamline and fully integrate these
processes and structures, and increase its focus on demonstrating
the actual outcomes it achieves for consumers and markets.
Today’s National Audit Office report is the first assessment of
the FSA’s performance. It covers five areas: performance
management; working with other regulators; international influence
and representation; financial crime; and financial capability. It
was conducted at the invitation of HM Treasury under section 12 of
the Financial Services and Markets Act 2000.
The National Audit Office consulted a wide range of the FSA’s
stakeholders. While concerns were expressed – for example, on the
number of rules in the FSA Handbook, the implementation of
principles-based regulation on the ground and the need for the
FSA’s approach to reflect the actual experience of consumers – the
majority of stakeholders had broadly positive views on the FSA’s
performance in the five areas examined.
The National Audit Office found:
- On performance management - The FSA has
developed and is developing useful tools to manage its performance
in meeting its objectives in an economic and efficient way. It must
now look to streamline and integrate these tools and also get a
better grip on information on the cost of its activities.
- On working with other UK regulators - The FSA
has good and improving working relationships with other UK
regulators. It should focus on working collaboratively with the
Office of Fair Trading to promote strengths and avoid duplications
in the promotion of competition and consumer protection.
- On influencing and representation
internationally - The FSA commits significant senior level
resource to influencing international developments, where it is
generally effective, but could sharpen up its communication to
stakeholders about its strategy and contribution.
- On financial crime - Combating financial crime
has tended to receive less attention than other elements of the
FSA’s responsibilities. But the FSA has recently restructured and
enhanced its efforts. To make a success of this, it needs to review
the assessments it makes of firms and the skills and training of
its supervision teams.
- On financial capability - The FSA is a world
leader in its work on financial capability. It should build on this
by focusing on the costs of low financial capability, setting
measurable goals for its impact on consumers and developing with
stakeholders its medium term strategy for financial capability
beyond 2011.
Sir John Bourn said today:
“The FSA has done well in managing the merger from 11
regulatory bodies to become one of the world’s first unified
financial services regulators. In doing so, it has created strong
and effective structures.
“But the challenge for the FSA is now to move to the
next level. It must do more to demonstrate its impact; to get a
clearer understanding of how much its different activities cost;
and, crucially, to streamline its processes and advice, to benefit
industry and consumers.”
Notes for Editors:
- Press notices and reports are available from the date of
publication on the NAO website, which is at www.nao.org.uk. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 850 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 24/07
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