Risk‐based regulation in the Financial Services Authority
Journal of Financial Regulation and Compliance
ISSN: 1358-1988
Article publication date: 1 December 2002
Abstract
Regulation imposes both direct and indirect costs. Regulators have to be conscious of these costs and the finite resources available to them. The paper outlines the way in which the Financial Services Authority (FSA) has developed a system of financial supervision under which resources are directed to those issues, firms and consumers which pose the greatest risks or opportunities when judged against its statutory objectives. The application of a risk‐based approach to supervision is effectively required by a number of principles of good regulation enshrined in legislation along with a requirement to undertake cost‐benefit analysis when devising new rules. As well as informing high‐level aims, the paper shows how the risk‐based approach, through the FSA’s planning and budget process and firm specific risk assessments, affects decisions on supervisory issues and resource allocation. It also outlines how the FSA will account to government for its performance.
Keywords
Citation
Sergeant, C. (2002), "Risk‐based regulation in the Financial Services Authority", Journal of Financial Regulation and Compliance, Vol. 10 No. 4, pp. 329-335. https://doi.org/10.1108/13581980210810300
Publisher
:MCB UP Ltd
Copyright © 2002, MCB UP Limited