Objectives
The Practitioner Panel measures its own performance and effectiveness on the basis of six objectives. They are not statutory but were agreed by Practitioner Panel members to help them better perform their statutory role.
The six objectives must be seen in the context of two core principles that are vital to the proper functioning of the financial markets and to effective regulation:
- Practitioners’ interests are best served by ensuring clients’ prosperity and financial awareness.
- A clear distinction must be drawn between wholesale and retail markets.
Six Practitioner Panel Objectives in brief:
-
Monitor Overall Effect of FSA Activities on the Industry
To gauge the cumulative burden of incremental regulatory initiatives and regulation as a whole, including EU and international efforts. -
Assess FSA Effectiveness, as seen by Practitioners, against its Objectives
To evaluate FSA compliance with all objectives and principles of good regulation, including the desirability of facilitating innovation and of maintaining the UK’s competitive position. -
Actively Communicate Industry Concerns to FSA
To voice to FSA issues of general concern to the regulated community over developments that could impact the UK financial services industry. -
Actively Promote Broad Industry Views and Interests
To play an active role in formulating and communicating to FSA a broad practitioner view on the requirements for fair, efficient, and innovative markets. -
Provide Practitioner View to FSA on Specific Regulation
To respond when requested to by FSA with a practitioner view on early drafts of regulatory initiatives and discussion papers. -
Promote International Competitiveness of the UK Markets
To safeguard the competitive standing of the UK financial markets in the context of developments in the European Union and internationally, and to encourage innovation.
The Practitioner Panel does not carry out activities on behalf of FSA, nor does it seek to duplicate the work of trade associations.
The six objectives in detail
Monitor Overall Effect of FSA Activities on the Industry
The Panel monitors the overall impact of the accumulation of incremental regulatory actions across all sectors of the UK financial services industry. Its aim is to ensure that innovation and competitiveness in the local markets are not stifled by overly costly and complex regulation. The Panel encourages FSA staff to recognise that even though compliance costs and efforts associated with individual proposals may not seem excessive, they have to be judged in the context of the total burden of new regulation to avoid overload.
Furthermore, it advises the regulator to channel its resources toward pressing policy initiatives that are inevitable because they originate from European Union directives or other international and national political obligations, and delay those proposals that lack real urgency.
Assess FSA Effectiveness, as seen by Practitioners, Against Its Objectives
The Panel adopts a holistic approach to monitoring FSA’s general effectiveness. It judges the regulator on the basis of its own objectives and principles of good regulation to avoid a bias in its approach that could be detrimental to UK practitioners. It consistently promotes key principles set forth in the Financial Services and Markets Act 2000, for example:
- The desirability of facilitating innovation in connection with regulated activities.
- The international character of financial services and markets and the need to maintain the competitive position of the United Kingdom.
It also monitors the efficiency of FSA’s organisational structure and policy approach, as perceived by the industry. To help increase FSA’s efficiency and at the same time ease the regulatory pressure on the industry, the Panel pushes for a clear distinction between the regulation of wholesale and retail markets and for the harnessing of market forces instead of rule-making, where possible.
One key tool for meeting this objective is the Panel’s bi-annual Survey of Regulated Firms, which allows it to gauge practitioners’ views of the regulator’s impact and efficiency.
Actively Communicate Industry Concerns to FSA
The Panel brings to the attention of FSA general issues - emanating from the regulator itself or from other sources - which practitioners feel could be of major significance or controversy, and which will influence the development of the UK financial markets. In its role as a representative of practitioners’ interests it identifies regulatory and other developments on the domestic and international front that could be damaging or important to the UK financial services industry as a whole.
The Panel communicates these concerns as they arise throughout the year, but also outlines them in the results of its Survey of Regulated Firms; in regular meetings with senior FSA staff; and in its Annual Report.
Actively Promote Broad Industry Views and Interests
The Panel actively upholds the general interests of the financial services industry in the regulatory decision making process. It contributes a broad financial industry view on the formulation of FSA policy, and how it will impact the regulated community. The Panel also communicates consistently to FSA broad principles that are endorsed by practitioners across market sectors to ensure that the markets function smoothly, fairly and orderly without being too restrictive.
For example, the Panel weighs:
- whether the cost of regulatory initiatives to the industry outweigh the benefits to both, practitioners and consumers;
- whether proposals could reduce international competitiveness or stifle innovation;
- whether regulatory action is proportionate and properly distinguishes between wholesale and retail markets; and
- whether alternatives to regulation, such as harnessing market forces, have been considered.
Provide Practitioner View to FSA on Specific Regulation
The Panel reviews the impact of FSA policies at the pre-consultation, formal consultation and publication stages, insofar as they affect regulated firms, individuals and the financial services markets, and feeds back its views to the Board. It strives to comment on FSA papers as early as reasonably possible in the drafting process to avert any major issues at the conceptual stage, which could inflict an excessive burden on the regulated community. Even though it prefers to look at the papers on the basis of broad principle, rather than detail, it will also comment on specific elements of FSA papers where necessary.
The Panel is also available to be consulted by FSA on specific high-level regulatory decisions that will have a significant impact on the UK financial services industry.
Promote International Competitiveness of the UK Markets
Regulatory activities have a direct impact on the competitiveness of UK firms in the international arena. Excessively costly, burdensome or complex regulation could threaten innovation, flexibility and the leading role of the UK financial services industry. Hence the Panel challenges FSA to include considerations for international competitiveness in all of its policy decisions.
The implementation of the European Union’s Financial Services Action Plan adds urgency to this objective. While the Panel is sympathetic to FSA’s desire to avoid lagging behind in the implementation process of European directives, it also works to prevent super-equivalence of regulation, which could damage UK firms in comparison with their European counterparts.
The Panel will take into account the proposed methods of implementing EU Directives. It will, in particular, point out that super-equivalent implementation must be justified by clear and concrete benefits to UK firms.
Especially in the European context, the UK is in the unique position of being the only large-scale exporter of financial services, and thus often finds itself isolated in European negotiations over markets regulation. The Panel recognises the importance of contributing a united UK practitioner voice to the Brussels discussions to help the UK Government protect the interests and competitiveness of the financial services industry.
