• About the FSA
  • What we do
    • Regulatory approach
      • Operating framework
      • Risk architecture
      • Risk management
      • Strategic planning

The FSA has been the single regulator for financial services in the UK since December 2001, when we were given our statutory powers by the Financial Services and Markets Act 2000 (FSMA).

We have a wide range of rule-making, investigatory and enforcement powers to enable us to meet four statutory objectives summarised as one overall aim: to promote efficient, orderly and fair markets and to help retail consumers achieve a fair deal.

We currently regulate over 29,000 firms with a diverse range of sizes and activities. And we publish a single Handbook of rules and guidance for all authorised firms carrying out business in the UK.

In recent years, the Government has increased the scope of our work: since November 2004 we have regulated mortgage business; and since January 2005, general insurance activities.

Our approach

In January 2000, we set out our proposed approach to regulation in A 'New Regulator for the New Millennium'. This explained the operating framework we intended to put in place to enable us to meet our statutory objectives.

This framework is more commonly known as ARROW, which stands for the Advanced, Risk-Responsive Operating frameWork, and it is at the heart of our risk-based approach to regulation.

We reviewed and updated ARROW after its first few years in operation. The current framework, ARROW II, was rolled out in 2006.

We explain more about how we specifically apply ARROW II when supervising firms in 'how we supervise firms'.

As a risk-based regulator, our approach is based on a clear statement of the realistic aims and limits of regulation; it recognises the proper responsibilities of consumers and of firms' own management, as well as the impossibility and undesirability of removing all risk and failure from the financial system.

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Our statutory objectives

For us to consider something to be a risk, it must have the potential to cause harm to one or more of our four statutory objectives. So, we need to identify, assess, prioritise and address risks to these objectives whilst having regard to the principles of good regulation. These objectives and principles are set out in FSMA, and we are therefore legally obliged to ensure that all aspects of our regulatory work meet these requirements.

As we face a large number of risks due to our very broad remit, we focus our resources on mitigating the risks that matter most. We explain this process in our operating framework.

The Firm Risk Assessment Framework [PDF] – Updated August 2006