Regulator introduces new stress test rules

The Financial Services Authority (FSA) has announced a package of new measures to enhance its rules on stress and scenario testing at regulated firms that it hopes will reduce the risk of firms failing in future. Current market conditions have drawn attention to the adequacy of existing rules and the FSA said firms’ current arrangements “are not as robust, nor as embedded in senior management decision-making as we would like”. Although the most high profile failures from the recent crisis have been in the banking sector, some of the new rules will also apply to insurers.