Responding to the Treasury Select Committee's contribution to the debate over the future of financial regulation, the FSA said: “The report acknowledges that the FSA has proactively identified and rectified its historic mistakes and that the financial services sector has clearly felt this change in approach.
”The FSA has changed radically since it published an internal review in early 2008. A series of operational and philosophical reforms, including the supervisory enhancement programme, have created a sustainable approach to financial services regulation. This new approach is based on an integrated risk assessment of prudential and conduct risk and is designed to be effective in all economic circumstances.
”The FSA's new intensive supervisory approach is about making judgements on what might happen in the future - boom or bust - rather than acting solely on observable facts. We are using these expert judgements to test the robustness of firms' business models, their governance framework and to assess whether individuals are fit to run them - regardless of their individual qualifications.”
