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John Tiner |
In its 2007/8 Business Plan, published on Tuesday, the FSA has further emphasised its commitment to principle-based regulation. John Tiner, outgoing CEO at the FSA, made this commitment in his opening statement of the plan's overview when he made it the FSA's main strategic priority for the coming year, and promised "significant changes in three main areas" – the Handbook, the skills and behaviour of FSA people, and the FSA’s information systems.
The FSA states that a more principles-based regulatory approach will produce significant benefits for firms, markets and consumers as firms will be able to decide which processes are appropriate to their activities, so leading to lower costs; customers will get better service and information from firms; and the FSA will be able to provide a better, risk-based service. There is now a new set of initials – MPBR – More Principles-Based Regulation – in use.
However this will come at a cost. Tiner said, "More principles-based regulation will produce significant benefits for firms, markets and consumers but we need to invest in our people and information systems to realise this change. This will result in an FSA that is better equipped to face future challenges and to deliver better outcomes for all our stakeholders."
Information technology costs (including outsourcing) are planned to nearly treble, rising from a £10.5M spend in 2006/7 to an expected £29.1M in the coming financial year, and external professional fees will rise by £10M to £38.5M. The FSA will also set aside £50m to improve the effectiveness of its people and the move towards MPBR. This sum will cover expected one-off costs such as staff changes and better knowledge management. To avoid adding this cost to fees, the FSA has set up a 10-year loan facility with Lloyds TSB.
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