Handbook review - The FSA's approach to delivering a more consistent Handbook
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The FSA continues to look for ways it can improve on its rules and guidance through the Handbook.
Our Handbook presents the standards we expect of regulated firms and is a key vehicle for communicating those standards to the outside world. It should therefore reflect our vision and values. These include an approach to rule-making based as far as possible on high-level principles, rather than detailed prescription; a focus on senior management responsibility; and acting in a proportionate and risk-based way.
The Handbook is long and sometimes detailed, bringing together a legacy of rules from previous regulators. The Handbook also includes new material to accommodate government decisions to increase the scope of our responsibilities, for example, to include mortgage and general insurance business. It is also the means through which numerous European directives are implemented.
We also believe the policy content of the Handbook should be kept under review, in a targeted way. Both in financial markets and the overall regulatory environment that firms operate in have changed since our Handbook was introduced in December 2001. We have set out the following key criteria for identifying areas where we should look to make changes, these are;
- Where requirements are more restrictive than needed to achieve our objectives;
- Where they do not deliver benefits to justify their costs; and
- Where they are not consistent with our focus on senior management responsibility.
Naturally there will be concerns in the industry to proposals we may make, therefore, we have created Guiding Principles to follow in our approach to reviewing the Handbook.
Guiding principles
In reviewing the Handbook, we will be guided by the following principles:
- Focusing on making changes in areas where we can have real impact and only respond to suggestions to make changes to individual Handbook provisions where the benefits are clear;
- Taking advantage of opportunities to streamline the Handbook as they arise – for instance, where these is scope to redraft material when implementing a directive. We are already using the opportunity provided by MIFID to simplify our COB regime;
- Adopting high-level standards where these are more appropriate than detailed rules. Benefits arise from focusing our attention on senior management responsibilities and allowing firms greater flexibility in some areas; and
- Ensuring that we do not leave firms without guidance that is useful.
Further considerations
We will also bear in mind the need to:
- Avoid significantly changing rules and guidance that have only recently been introduced and be sensitive to areas already undergoing significant regulatory change;
- Avoid increasing costs for firms, in the long term. We may ask firms to face one-off costs of change but, in many cases, they should see a continuing reduction in costs and regulatory burden from our proposals;
- Deliver appropriate overall consumer protection, in the long term. Our review will try to identify the most appropriate tools for making sure that firms behave responsibly and treat their customers fairly;
- Avoid focusing on the length of the Handbook alone. We will look to shorten the Handbook only where this does not make it difficult to understand or navigate; and
- Avoid introducing additional requirements when implementing European Directives without justifying them independently.
Previous reviews of the Handbook such as the work on COBS, ICOBS, Money Laundering and Approved Persons, to name a few, have all supported our approach in achieving a more consistent and coherent Handbook.
Further improvements
Much work has also been done to improve the accessibility of the Handbook, particularly by improving our website, but more can be done to improve this further, as well as the simplicity with which the rules and guidance are expressed.
We will continue to look actively and imaginatively for ideas and opportunities for review, consistent with the Guiding Principles outlined above.
To view our published documents relating to Handbook review please see the FSA Library page. The what's new page will provide readers with recently published documents, for example, Consultation Papers, Policy Statements, Handbook changes and much more.
