What we do

Related information

For information on our operating framework, risk management and risk assessment see:

Regulatory approach

One of our aims is to help retail consumers achieve a fair deal. One way we do this is by identifying potential emerging retail risks as they arise and taking proportionate action in response to them.

Here we explain what we do to identify risks, how we prioritise these risks and how we decide what action, if any, is appropriate.

Identifying thematic risks

Risks in the retail market take many forms: risks to consumers, firms, sectors, or the market as a whole. We use a variety of sources to identify emerging retail risks including:

  • market data;
  • current trends and developments in the markets;
  • financial promotions;
  • issues identified through our discussions with firms, including information which firms give us in the course of our programme of retail intelligence visits; and
  • risks identified by our sector teams, supervisors, contact centres, and other stakeholders such as industry and consumer bodies.

We look for indicators of new or unexpected developments and try to identify risks. If we need to, we take action to mitigate risks before they cause serious detriment. For example, an unusual surge in retail sales of a product might prompt us to make further enquiries about how this product is being sold.

Prioritising thematic risks

We prioritise our workload to focus on the most significant risks i.e. the big things that matter most. This means tackling issues where we feel there is a potential threat to one or more of our statutory objectives. When we decide which risks to concentrate on, we consider our key thematic priorities. However, because we are dealing with emerging risks, we commonly identify areas not currently covered by the thematic plan, but where we feel further investigation is necessary.

Where a development could indicate a new risk, we will often do a small amount of work to find out more and identify whether we need to take action. We assess how big a risk is, and if we should take action, by looking at its impact (the potential harm that could be caused to retail consumers and markets) and probability (the likelihood of the risk issue or event occurring in practice). You can find more information on our risk assessment framework, known as ARROW II, on the Regulatory approach pages.

In practice, of all the many issues we consider, the instances where we decide not to act far outnumber the instances where we do decide to take action. Moreover, proportionate action often means some limited follow up. Only a small proportion of the risks that we consider leads to firm-facing thematic work.

Back to topBack to top

Examples of outcomes of emerging retail risk analysis

In the second half of 2007, the Filtering Group, an FSA internal committee that considers emerging retail risks, assessed 19 issues. The Group decided on the following courses of action:

  • to take no further action on 10;
  • to give further consideration to three;
  • to undertake small pieces of follow-up work on four; and
  • to undertake thematic projects on two.

The following is an illustrative list of issues taken through the filtering process in the recent past. It includes issues on which we have decided to:

Examples of the outcomes of some of our recent thematic projects can be found in the FSA Library.


Back to topBack to top