Transparency in framework for the FSAs regulatory processes

FSA Managing Director Phillip Thorpe said:

This is a clear and transparent framework going beyond what is required under the Financial Services and Markets Act. It is a further important step towards our preparations for operating under our full powers which we will receive later this year, and signals our commitment to be open and accountable in respect of the way we will operate.

The principles set out in the manuals published today will operate alongside the overall new risk-based approach to regulation which we are developing. This is a dynamic process and as the new regulatory approach comes increasingly on stream, we will keep the manuals under review and look for further improvements to ensure that the impact of regulation remains proportionate to meeting the statutory objectives we have been set.

Scope of the manuals

The four manuals published today form the Regulatory Processes part of the FSA Handbook of Rules and Guidance:

• the authorisation manual guides applicants through how the FSA will process their applications. This includes firms seeking authorisation, individuals seeking approved person status, and EEA firms seeking to establish a branch in the UK or provide cross-border services into the UK.

• the supervision manual explains the FSAs approach to ongoing supervision of firms. It covers matters such as changes to the types of regulated activity a firm can undertake, rule waivers, changes to major shareholders and the need to have independent auditors.

• the enforcement manual sets out how we shall use our enforcement powers with authorised firms, approved persons and others. This encompasses not only disciplinary action, but also civil and criminal litigation and market abuse cases.

• the decision making manual sets out the procedures the FSA will use to reach decisions on issuing statutory notices relating to authorisation, supervision and enforcement under the Financial Services and Markets Act. A key feature will be the Regulatory Decisions Committee (RDC) which will be responsible for major regulatory decisions. The RDC chairman will be full-time and will have a legal background. The members of the Committee, who will be part-time, will comprise current and recently retired practitioners and individuals representing the public interest. The FSA has also decided that, in the interests of consistency, decisions on whether to start or end civil or criminal proceedings will normally be taken by the chairman of the RDC.
  

Notes for editors

1. Todays publications which include a summary, Regulatory processes manuals (Authorisation, Supervision, Enforcement and Decision making) and Threshold Conditions. Feedback on CP63 The Authorisation manual, CP64 The Supervision manual and CP65 The Enforcement manual and 'final' text and Consultation on supplementary notification rules for the Supervision manual are available on the FSA website www.fsa.gov.uk. The publication represents substantially all of the four manuals but some parts principally relating to the passporting of firms into and from the European Economic Area will be issued in final form later.

2. The FSAs Handbook of Rules and Guidance will be the single source of rules and guidance for all regulated firms and individuals under the Financial Services and Markets Act after it comes into effect. The Handbook replaces numerous rule books, guidance notes, regulatory updates etc issued by the preceding regulators.

3. The FSA previously consulted on the draft Authorisation, Supervision and Enforcement Manuals in August 2000 (CPs 63,64 and 65). A conclusion of this consultation was that the material on decision making within the manuals should be relocated into a separate decision making manual.

4. The Government announced on 15 March that N2, the date when the FSA receives its full powers and responsibilities, will be no later than the end of November 2001.

5. 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.

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