Proposed overhaul of FSA rules and guidance on enforcement and related decision-making procedures

Joanna Gray, University of Newcastle

Background

The Second FSA Consultation Paper of 2007 sets out its proposals for and thinking behind a major reformulation of its current Handbook material applicable to enforcement processes and policy, as well as the decision making procedures allied to regulatory enforcement. These changes, on which the FSA is inviting views from all interested parties by 10 April 2007 with a view to feedback and change implementation by July 2007, are part of the FSA’s continuing efforts to simplify and streamline its Handbook thus improving usability and navigability. They are also a natural progression from the July 2005 Review of FSA Enforcement and need to be seen in the wider context too of Hampton Review recommendations, the Legislative and Regulatory Reform Act of 2006 and the Cabinet Office Review of Principles on Regulatory Sanctions published in November 2006. The significance for financial services regulation of those latter three initiatives was highlighted in December 2006 FRI . All of these recent ‘re-thinks’ of regulation point in the same direction – one of increased focus away from detailed regulatory material on processes and procedures and towards greater prominence for what regulation is trying to achieve, its goals and desired outcomes and the need for those to be understood and internalised by the subjects of regulation. This is an inevitable consequence of risk-based regulation and in many ways began much earlier in the New Settlement under the Financial Services Act 1986 when, in the early 1990s the then Securities and Investments Board first introduced the idea of Principles and Core Rules and Obligations and strove to shift technique away from detailed prescription and towards a statement of what regulation should achieve.