The report assesses the Authority's progress under each of its three broad aims:
• to promote efficient, orderly and fair financial markets, both wholesale and retail;
• to help the retail customer for financial services obtain a fair deal; and
• to improve its business capability and effectiveness, so as to make the FSA easier to do business with.
In his introductory statement, the FSA chairman, Callum McCarthy, says: "Regulation depends not only on legal powers, but on the effective, proportionate and fair exercise of those powers. We have therefore been much concerned to review our policies and practices to see that the FSA exercises its powers in this way. In particular, we are reviewing two aspects of our
performance. The first is to examine the costs we impose on those we regulate, both the direct costs of the FSA and the wider costs of compliance, and whether, and if so how, these can properly be reduced. We are doing this jointly with the Practitioner Panel. The second is to examine the effectiveness
and fairness of our enforcement processes, so that those affected receive decisions which are – and are seen to be – fair; are made promptly; and are not unnecessarily costly – all of which are in their as well as the public interest. I do not expect those who are subject to FSA enforcement action to welcome it,
but it is important that they and others understand the process and recognise that they have been treated fairly. Both studies raise important issues, which we wish to see discussed openly and on the basis of agreed objective data."
Appendices to the report, also published today on the FSA website, provide further statistical information on the FSA's work during the year. This includes:
• Of the 36 milestones set out in the 2004/05 Business Plan, 31 were achieved.
Four were rescheduled because of factors outside of the FSA's control or because the FSA and the industry agreed that a delay would be useful. In the fifth case, consultation on projection rates and product disclosure, the delay was caused by the FSA.
• The number of authorised firms increased by 14,479 to 24,423, largely as a result of the introduction of mortgage and general insurance regulation. 566 firms withdrew their application during the process.
• The number of approved persons rose from 139,337 to 165,587
• The Regulatory Decisions Committee considered 269 new cases. Of these, 30 related to authorisation refusals, 148 to mortgage and general insurance applications, 77 related to enforcement cases, 11 related to breaches of the
Listing Rules and there were 3 cases involving civil/criminal proceedings.
• The FSA's enforcement division closed 200 investigations during the year. Of these, 79 concluded with the use of powers (such as prohibition, financial penalties and variations of permissions) and 121 without the use of powers.
Private warnings were issued in 11 of these 121 cases.
• The FSA levied £22.25m in financial penalties during the year. Of this, £17m was paid by the Shell Transport and Trading Company and £5.25m by 30 firms or individuals. In 2003/04, the total was £12.4m from 22 firms or individuals.
