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7th February 2011

Latest survey of regulated financial firms identifies key lessons for new regulators

The Practitioner Panel has today published its biennial survey of regulated firms. It shows a strong belief in the need for regulation from firms, but is tempered by concern about the costs of compliance and the difficult circumstances of the financial crisis that has driven much of the views on the FSA in this survey.

The survey was conducted on behalf of the Practitioner Panel by TNS-BMRB between July and October 2010 and is based on responses of 4,256 regulated firms with an overall response rate of 43%. See notes to editors for further details.

Given the scale of the recent financial crisis, and the impact which it has had on firms, it was never likely that this survey would register the highest marks for the FSA, or indeed any part of the regulatory infrastructure. It is not surprising that overall levels of satisfaction with the FSA amongst regulated firms have fallen slightly over the last two years.

However, there was a difference in overall satisfaction with the relationship with the FSA depending on how recently they had been in contact with the FSA – around a third of firms (34%) that had had contact with the FSA in the last six months were highly satisfied with their relationship, compared with 22% of firms that had not had recent contact.

At a time when the Government is developing a new regulatory regime to replace the FSA, it is important to take on board the experiences of the industry with the current regulator in order to develop new structures which work effectively. The Panel highlights the following points in the Foreword to the Survey:

• There should be no automatic read across of policies and supervisory approaches between sectors. The regulators should take clear account of the different characteristics of different sectors and the different risks within and between sectors.
  
• Costs and impacts of implementation of new policies must be considered, with clear success measures identified, to minimise any unintended consequences and to develop policies which are proportionate to the risk.
  
• The regulators must aim for greater continuity within supervisory teams, and those teams must have the requisite skills, experience and firm specific knowledge.
  
• There must be greater focus on value for money – with clear explanation and justification for increases in expenditure.
  
• During this time of change, regulators must prioritise in a disciplined way and not lose sight of key imperatives – particularly the need for engagement with the EU and internationally.

Iain Cornish, Chairman of the Practitioner Panel said:
“This survey recognises the importance to the industry and consumers alike of strong and cost effective regulation. It also highlights areas where regulation could be more effective. At a time of regulatory change, it is important that the views of regulated firms are listened to, as well as the views of consumers, the media and politicians.”

NOTES FOR EDITORS

1. This is the sixth biennial survey of regulated firms undertaken on behalf of the Financial Services Practitioner Panel. The report is on the Panel’s website - http://www.fs-pp.org.uk. Overall 10,035 firms were invited to take part in the survey (conducted via post using a self-completion questionnaire). In total 4,256 returned the completed questionnaire representing a response rate of 43%.
2. Financial Services Practitioner Panel was established under the Financial Services and Markets Act 2000 to represent the interests of practitioners and is independent of the FSA. Members are drawn from regulated institutions and market users at a senior level. Membership rotates to ensure a balance between consistency and new input.
3. The current members of the Panel are:
   Iain Cornish (Chairman) Yorkshire Building Society;
   Russell Collins Deloitte UK;
   Mark Hodges Aviva UK;
   Simon Hogan Morgan Stanley;
   Garry Jones NYSE Euronext;
   Roger Liddell LCH.Clearnet Group;
   Guy Matthews Sarasin Investment Funds;
   Helena Morrissey Newton Investment Management;
   Andrew Ross Cazenove Capital Management;
   Malcolm Streatfield Lighthouse Group;
   Paul Swann ICE Clear Europe;
   Doug Webb London Stock Exchange Group;
   Helen Weir Lloyds Banking Group.