FSA aims for smooth transfer of firms concessions

The proposals will allow firms to carry forward written concessions automatically where the underlying provisions remain substantially similar in the Handbook. Firms will also be able to continue to rely on current individual guidance where it remains relevant post-N2.

The aim in bringing forward these proposals is to promote continuity for firms and to reduce the administrative burden on firms and the FSA at N2, when other considerable changes will need to be managed.

Notes for editors

1. The proposals are set out in Consultation Paper 89 Grandfathering Concessions and Individual Guidance which is available on the FSA Website (www.fsa.gov.uk). Comments should be sent to the FSA by 25 June 2001. CP 89 builds on the principles set out in FSA Briefing Note Grandfathering of waivers published in December 2000.

2. The FSA intends to make a transitional FSA rule using its powers under section 156(2) of the Financial Services and Markets Act to grandfather written concessions. The term written concession is defined in the proposed transitional rule as a waiver, exemption, concession, modification, consent, approval, determination or similar exercise of discretion which disapplies a current regulatory provision. Any concession given informally and not recorded in writing will not be grandfathered.

3. Under the proposed transitional rules grandfathered written concessions would lapse 12 months after N2, or in the case of the interim Prudential sourcebooks and sections 16.6 and 16.7 of the Supervision manual, which are temporary provisions, until the relevant provisions are revoked.

4. In the case of current individual guidance, firms will be allowed to carry forward individual guidance after N2 where it remains relevant (i.e. where rules and guidance under the new regime remain the same). In the context of monitoring and enforcing compliance with regulatory requirements, we will proceed on the basis that a firm has complied with a rule or requirement if it acts in accordance with current written individual guidance in the circumstances contemplated by the guidance.

5. HM Treasury has indicated that N2 will be no later than the end of November 2001.

6. 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.

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