Getting to grips with e-risk

The FSAs goal is to achieve three key regulatory outcomes:

• Firms and markets have adequate IT systems and controls to address the risks in their business;

• Consumers have access to relevant and comprehensible information and guidance about obtaining financial services via e-commerce channels; and consumers appreciate that, once armed with this information, they have a responsibility to protect themselves from the risks they can best manage;
  
  
• FSA adapts regulation to e-commerce developments.

Introducing an FSA discussion paper, The FSAs approach to the regulation of e-commerce, Philip Robinson, FSA Director and head of its e-commerce theme work, said:

It is vital that the regulatory framework helps firms and consumers take maximum advantage of the opportunities presented by e-channels such as the internet, digital television and mobile telephony. This paper opens up debate on a wide range of important issues in which firms, consumers and the FSA all have a role to play.

Around one in ten UK adults are already buying financial services over the internet and there are now more than 60 banks and 35 stockbrokers providing internet based services who are regulated by the FSA.

The paper identifies a number of priority areas for further work:

• IT systems and controls: todays paper sets out the FSAs position on IT risk management. It stresses senior management responsibility for setting the control framework, and discusses how the FSA can help promote standards addressing risks faced by firms.

• Consumers: new pages have been added to the FSAs Consumer Help website today (www.fsa.gov.uk/consumer) offering tips on how to shop safely and effectively on the virtual high street. The paper discusses consumers approach to security and use of online information. Among the issues raised are a code of conduct for bulletin boards, and the use of mobile telephones.

• Digital signatures: the use of digital signatures is an important building block in the development of e-commerce. The paper poses a number of questions about the issuance, acceptance and use of digital signatures, particularly money laundering issues.

• .fin: the paper presents an analysis of whether a website address should be reserved for financial services firms, such as www.firmname.uk.fin. It concludes that the costs and difficulties involved presently outweigh the benefits to be gained.

• International: e-commerce is a global medium which requires global co-operation among regulators. The paper reports on the FSAs contribution to international regulatory initiatives.

• FSAs own use of the internet: the FSA is also looking to make effective use of internet technology in its dealings with firms. A project is underway to enable firms to submit regulatory data and forms electronically and publication of an electronic version of the FSA Handbook of rules and guidance on the FSAs website will mark a new approach to the dissemination of rules and guidance.
  

Notes for editors

1. The discussion paper, The FSAs approach to the regulation of e-commerce, is available from the FSAs website (www.fsa.gov.uk) under Publications. Responses to the paper should be received by end-September 2001.

2. The FSA has established an E-Business Advisory Group, containing both industry and consumer body representatives, to provide a mechanism for continuing discussion between the FSA, firms and consumer bodies on e-commerce issues affecting regulation.

3. The FSA will host a conference on the implications of e-commerce for the financial services industry on 20 June. Among those attending will be representatives from the FSA, financial services industry, and the FSAs Consumer Panel. Further details are available from the FSAs website or from the FSA Events team on 020 7066 0098.

4. The FSAs position on account aggregation was set out in a press release (FSA/PN/057/2001) issued on 15 May 2001 (available from the FSAs website).

5. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

6. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.