FSA publishes business plan

Source: Financial Services Authority

The Financial Services Authority (FSA) today published its Business Plan for 2008/9.

The plan sets out the FSA's programme of work for the year ahead to address the risks highlighted by the Financial Risk Outlook, published last week (29 January).

The document outlines specific FSA initiatives regarding heightened supervisory oversight in areas such as firms' liquidity, adequacy of stress testing and their general operational preparedness for unexpected events.

Hector Sants, chief executive of the FSA, said: "This Business Plan reflects the less benign economic environment we face and our determination to implement the lessons learnt from the events of the second half of 2007. I believe those lessons support our underlying regulatory philosophy, but nevertheless do require some special initiatives, which are incorporated in the Plan.

"Overall, there is much we at the FSA wish to accomplish and the Business Plan is correspondingly ambitious although the uncertainty in the marketplace means we must be flexible and ready to reprioritise our plans, shifting resources should the need arise.

"A successful regulator needs to be both nimble in its reaction to immediate events and determined in embedding, into its institutional memory, the lessons learnt from the past. I believe in executing this year's business plan the FSA will demonstrate these characteristics."

Alongside the initiatives mentioned above, the FSA will continue to focus on longstanding, deep-seated risks to its objectives with the area of greatest concern being the retail market. The Business Plan details the FSA's continuing commitment to the Treating Customers Fairly programme (TCF), the Retail Distribution Review (RDR) and the Financial Capability Programme. The FSA will also publish a report on firms' systems and controls for managing the risk of consumers' personal data being lost or stolen, with feedback to the industry on good practice and areas of improvement.

The FSA, together with the Bank of England, will continue work on the regulatory framework for liquidity, the publication of a Discussion Paper in December 2007 being the first step. Following the Financial Stability and Depositor Protection Consultation Paper published on 30 January 2008 the FSA will work with HM Treasury and the Bank of England to improve the depositor protection regime and reform insolvency law for financial institutions.

Within the Enforcement division, the strategy is to achieve credible deterrence. The FSA will seek to increase penalties to achieve this goal.

The 2008/9 budget shows an overall increase of 7.1%, resulting in a rise in the Annual Funding Requirement (the amount raised from firms) of 6.9%. The major components of the budget increase are an investment of £5.9 million in the enhanced supervisory strategy for small firms and an investment of £3.5 million in the European Alternative Instrument Identifier. Underlying costs have increased by £11.5 million primarily due to increase in staff costs. Published alongside the Business Plan, the 2008/9 Fees Consultation paper (CP08/02) explains how the FSA proposes to raise the annual funding requirement from fee payers and provides an opportunity for comment on the fee and policy proposals.

Firms can get an indication of the FSA and Financial Ombudsman Service (FOS) fees and levies they may actually pay in 2008/09 by using the fee calculator on the FSA website, and will be able to make comparisons with previous years' rates. The Financial Services Compensation Scheme (FSCS) element of the fee calculator is currently being developed to incorporate the restructuring of the FSCS funding model, and firms will not be able to use this facility until mid-April 2008. To help firms estimate their FSCS levy in the interim, the FSA will be publishing some examples of the likely levy for typical firms on the fees section of its website.

Read the FSA's business plan here:Download the document now 483.5 kb (PDF File)

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