In discharging our functions under the Financial Services and Markets Act 2000 (FSMA), we are required to have regard to the following additional matters, which we refer to as 'principles of good regulation'.
The need to use our resources in the most efficient and economic way.
The non-executive committee of our board is required, among other things, to oversee our allocation of resources and to report to the Treasury every year. The Treasury is able to commission value-for-money reviews of our operations. These are important controls over our efficiency and economy.
A firm’s senior management is responsible for its activities and for ensuring that its business complies with regulatory requirements. This principle is designed to secure an adequate but proportionate level of regulatory intervention by holding senior management responsible for risk management and controls within firms. Accordingly, firms must take reasonable care to make it clear who has what responsibility and to ensure that the affairs of the firm can be adequately monitored and controlled.
The burdens or restrictions we impose on the industry should be proportionate to the benefits that are expected to result from those burdens or restrictions.
In making judgements in this area, we take into account the costs to firms and consumers. One of the main techniques we use is cost-benefit analysis of proposed regulatory requirements. This approach is shown, in particular, in the different regulatory requirements we apply to wholesale and retail markets.
The desirability of facilitating innovation in connection with regulated activities.
This involves, for example allowing scope, where appropriate, for different means of compliance so as not to unduly restrict market participants from launching new financial products and services.
The international character of financial services and markets and the desirability of maintaining the competitive position of the UK.
We take into account the international aspects of much financial business and the competitive position of the UK. This involves cooperating with overseas regulators, both to agree international standards and to monitor global firms and markets effectively.
These two principles cover avoiding unnecessary regulatory barriers to entry or business expansion. Competition and innovation considerations play a key role in our cost-benefit analysis work. Under the Financial Services and Markets Act, the Treasury, the Office of Fair Trading and the Competition Commission all have a role to play in reviewing the impact of our rules and practices on competition.
The desirability of enhancing the understanding and knowledge of members of the public of financial matters (including the UK financial system).
