Overview from the Chairman
The Financial Services Practitioner Panel monitors the effectiveness of the Financial Services Authority and ensures that the views, concerns and interests of practitioners are properly represented in UK financial services regulation. The Panel consists of high level financial services executives covering all aspects of our industry. The Chairman of the Smaller Businesses Practitioner Panel is “ex-officio” a member.
The Panel's key objectives are to monitor the overall effectiveness and performance of the FSA, to communicate specific industry concerns to the FSA and represent their interests generally, and promote the international competitiveness and innovative nature of the UK markets. At the same time, the Panel recognises that practitioners' interests are best served by ensuring wholesale and retail clients' prosperity and financial awareness.
We aim to take a high-level strategic view, and to complement the excellent work of the trade associations, with whom we maintain close links.
We provide input at a early stage of the regulatory decision-making processes. This enables us to be more effective and add value at a point at which Panel members' seniority and relevant expertise is put to optimal use.
One of the major challenges for both regulator and industry over the coming years will be to establish exactly how principles-based regulation, in particular FSA initiatives such as Treating Customers Fairly, will work in practice.
Firms will be tested in their ability to operate outside the safety, certainty and rigidity of a rules-based environment; the pay-off will be greater flexibility and room for innovation. For the regulator, on the other hand, the greatest challenge will be to ensure that its supervisory staff are sufficiently qualified and confident to make the judgement calls that will be required of them in a principles-based world. The benefits will be a sleeker, leaner FSA operation that will be able to respond swiftly and effectively to changes in the increasingly complex financial services sectors.
During the remainder of 2008, I intend to position the Panel in a way that allows it to be more proactive in setting its agenda, in determining (from a practitioners' perspective) what issues are most important and how best to devote its time and energy.
In the first instance, we propose to undertake our own assessment of whether principles-based regulation and TCF are being applied at the coalface in the suitably proportionate, consistent and risk-based way that the FSA has promised. This will be based on firms' day-to-day experiences with reference to real examples of where things are working well/less well.
At the same time, and given the recent FSA internal review of Northern Rock, the Panel will be looking carefully and critically at the FSA's Business Plan workload for 2008/9 and, specifically, the focus and resource being directed at retail and prudential requirements respectively. At a time when regulated firms continue to feel that the cumulative burden of regulation is difficult to cope with, the Panel believes that the FSA should now be asking itself whether to give demonstrably greater emphasis to solvency/liquidity issues and, in doing so, shift its supervisory attention away from certain conduct of business elements which might not be of immediate urgency.
The Panel will communicate the output of that work to the FSA in due course.
More generally, I expect 2008 to be another busy year for the Panel. Our comprehensive Survey of Regulated Firms is underway - which, in due course, will provide a valuable and authoritative view from the industry on the FSA's performance and effectiveness. In addition, the FSA's Retail Distribution Review is ongong; as are a whole host of other individual pieces of regulation - all of which, when taken together, will make it a full and challenging period ahead for the industry and Panel alike.
We look forward to continuing the constructive dialogue we have enjoyed both with senior FSA staff and industry representatives.
Nick Prettejohn
April 2008
