FSA prioritises ‘confrontational’ supervision
The Plan is a demanding programme of work for the year requiring greater policy and supervisory resources, and focusing on a number of key areas:
- Delivering effective supervision backed by credible deterrence in enforcement.
- Continuing to embed the organisational and cultural change needed to implement intensive supervision.
- The policy reform programme driven by the Turner Review and the wider policy agenda mandated by the European Union.
- Playing a role in promoting financial stability should the Financial Services Bill be enacted.
The FSA will be recruiting an additional 460 staff in 2010 to implement Solvency 2, and to deliver the intensive supervisory approach needed for the very largest firms.
Commenting, Hector Sants, FSA chief executive said: “Intensive supervision is inherently more confrontational. Our supervisors are making judgements both about the robustness of the business models of firms and the suitability of the products they are selling. We will then intervene promptly if we anticipate problems.
“This proactive approach to supervision requires significantly more people than the old reactive model and those individuals must be of a higher quality and supported by more sophisticated systems. If society wants a more proactive approach it must accept that it will have a larger and more expensive regulator.”
In developing intensive supervision the FSA’s regulatory approach has moved from retrospective intervention to proactive challenge. Supervisors now make judgements on firms’ business models; intervening early if they anticipate any risks that may arise from the firms’ conduct, selling practices, senior management competence or product development.”