FSA Identifies and Sets Risk Priorities for 2006

Joanna Gray, University of Newcastle, joanna.gray@newcastle.ac.uk

Importance of FSA’s Outlook for Risk

In last month’s edition of FRI this column highlighted how HM Treasury is seeking, by way of a regulatory reform order, to amend aspects of the Financial Services and Markets Act 2000, partly in order to reduce the sheer volume of material coming out of the FSA for consideration and often comment by the industry. The numbers of documents coming at them from the FSA are also from time to time the subject of complaint from firms who find it necessary to devote time and resources to at least reviewing them for any potential significance to their activities, regardless of whether or not they do call for their specific consideration, response or action. That time and diversion of effort is as much a cost of regulation as are more obviously direct costs such as annual fees, levies, training and penalties. In light of the Government and the FSA’s declared intentions to lighten the burden of regulation it therefore might be thought surprising that January saw the publication of a 112 page document addressed to all firms and consumers of regulated activities, entitled the “Financial Risk Outlook”. However this document is in many ways of fundamental importance to all firms and regulated individuals, be they large or small, retail or wholesale, authorised entity or approved person, for it provides a clue to how the regulator sees the world in 2006, what it sees to be of pressing importance and what priorities it will build into its risk based supervisory operating framework.