27 Feb 2008, David Benyon, Operational Risk & Regulation
LONDON – The UK’s Financial Services Authority (FSA) will stick to its principles-based regulatory agenda, despite the Northern Rock debacle and continuing market turbulence. This is according to Hector Sants, chief executive of the FSA, who was speaking at an FSA conference for retail financial firms.
Sants warned: “You should not seek to divert your attention away from focusing on conduct-of-business requirements and our high-level principles. In particular, you will need to continue to focus on treating customers fairly and to tackling areas of financial crime.”
Sants also spoke about the FSA’s internal review of its supervision of Northern Rock, stressing the bank’s management failures but acknowledging the criticisms the FSA has faced for failing to pre-empt or cope with the crisis successfully.
“Successful organisations have a learning culture and an institution that expresses infallibility is not one to trust. I would thus like to think that our determination to be open and proactive should be seen as being to our credit and help give confidence to industry and consumers. To that end, I want to assure you that we will act decisively to address the shortcomings that emerge from the review,” said Sants.
He also urged the leaders of the UK’s financial firms to acclimatise to new market environments and warned the stormy conditions would not be over soon.
“We recognise that the operating environment remains difficult, both for you and for us, and it is likely that these pressures will persist, particularly as investor confidence in some markets remains low.
“You should be preparing for this changed environment and you, and your customers, will need to recognise that there are both short- and long-term risks, and think about the implications.”