Two years on it’s time to take stock

“The regulatory framework established has been a resounding success,” Ruth Kelly, Financial Secretary to the Treasury, declared at the start of November as the Government launched its first review of operation of the Financial Services and Markets Act 2000 . The review “is not a grand design for change,” she said but will consider three main strands with completion expected within a year. Firstly, the Office of Fair Trading (OFT) will scrutinise the impact of regulation on competition in financial services in the light of the massive expansion of small businesses – general insurance and mortgage intermediaries - that will have to be authorised by January 2005. Secondly, the Treasury is pleased that the FSA has decided to examine how to make the Handbook easier to use. Proposals include separate guides to the Handbook for individual sectors; dividing the rules from the guidance; improving navigation of the electronic version; and an email regulatory development alert service. Provision of guidance is to be more centralised and subject to service standards. Guidance will be tracked in order to control quality and measure delivery rates.The FSA is also to obtain expert advice on how to analyse costs and benefits of regulatory developments retrospectively and to measure the cumulative impact of its rules on sectors of the industry.The Treasury has decided not to embark on a full value for money review of the regulator – under section 12 of FSMA it may do so at any time – because, it says, fees have not been the subject of general criticism by industry bodies and it would involve major disruption. However, Ms Kelly noted that “it would be unusual for there to be more than five years between value for money reviews”.