The Securities & Investment Institute’s (SII) Compliance Professional Interest Forum has contributed to the FSA Discussion Paper DP09/2 “Regulatory Response to the Global Banking Crisis”.
The SII Compliance Forum appreciates that there needs to be a change in the style of FSA supervision but questions whether the more “outcomes-focused” and “judging judgements” approach is the right response.
The SII Forum also warned against the risk of over-regulation, the importance of a healthy financial sector to the UK economy and, on an international level, to the UK as a global financial centre. “Tougher regulation in the UK or in the EU carries the considerable risk of driving business into willing hands outside it”, said Julian Sampson FSI, Chairman of the SII Compliance Forum.
The SII Forum suggested the FSA consider a differentiated approach to the regulation of firms of different size and it remains concerned that the FSA proposals are at best impractical and at worst damaging in smaller firms. It also warns that many of the FSA’s proposals (judging judgments, for example) are incompatible with the doctrine of senior management responsibility.
Questions are raised in the SII Forum response on the FSA lack of staff of sufficient experience and knowledge to implement some of the new approaches. “Its staff sometimes lack sufficient industry experience, particularly at the lower, operational level. We note the FSA’s current recruitment drive, but are concerned that this is only a temporary solution. Many of those who want to work at the FSA already do so. Those recruited in recessionary times are unlikely to remain when the jobs market improves. Notwithstanding the current recruitment drive, we doubt the FSA will be able to match the benefits available in the private sector over the long term. Indeed we are concerned that those recently recruited to the FSA from the private sector and who are used to such a culture will be uncomfortable in the more considered, bureaucratic world of the FSA.”, says the Forum.
“We are delighted to be able to contribute to this important FSA discussion paper which reflects the views of our SII Compliance Forum members. Unlike trade bodies, this Forum is composed of practitioners who are speaking direct from their experience. We hope the FSA will appreciate this direct feedback from actual practitioners”, said Julian Sampson FSI.
