These pages will be of particular help to the management of small retail firms.

They summarise the key elements for small retail firms of the FSA's paper 'Principles-based regulation – Focusing on the outcomes that matter'. They aim to give you a reasonable understanding of what principles-based regulation means as well as explain how it will impact on you.

Principles-based regulation is an important step forward and we encourage you to:

  • gain a good understanding of the approach;
  • engage with us by letting us have your written comments or by attending one of our free roadshows;
  • continue to think about how to adopt a more principles-based approach when running your business;
  • note how the specific milestones for small retail firms will impact on your firm, particularly the timetable for reviewing conduct of business rules; and
  • visit this site regularly for up-to-date information.

Key messages for small retail firms

  • Principles-based regulation will sustain the current rigorous regulatory environment for UK financial services, but with better and more effective regulation.
  • Over the next few years we will move to more principles-based regulation. This is a continuing process, which will require significant change of behaviour by both you and us.
  • The balance of the Handbook and our approach to supervision will rely increasingly on principles and outcome-focused rules.
  • We will provide a greater range of helpful and clearly sign-posted information to help you plan your business processes and controls with confidence.
  • Principles-based regulation will achieve benefits for consumers by fostering a more innovative and competitive financial services industry that also offers effective protection.
  • There are constraints on how far and how fast we can move towards principles-based regulation. We will continue to work actively with you to make more principles-based regulation a reality.