The Financial Services Authority is urging UK firms to make more progress on their response to the requirements of the Basel II Accord. Whilst the uncertainty over some elements of the Accord has delayed plans, the FSA are encouraging firms to increase attention on Basel II compliance to ensure they meet the January 2007 start date.
In a speech to the FSA 2005 Annual Public Meeting, Hector Sants, MD of Wholesale and Institutional Markets said that although the FSA had received indications from around a dozen firms intending to apply for the Basel II advanced approaches, they are still waiting to receive the first application. The deadline for completed submissions is the end of 2005.
Sants outlined the fact that firms need to make sure they have a clear understanding of the requirements of the advanced approaches to increase their chances of approval, not least the involvement of senior management. "Although we are not looking for all Board members to be rocket scientists, the senior management needs to understand enough to challenge the quants and the limitations of modelling alongside its benefits".
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