The Outlook sets out the background against which the FSA sets its priorities for the year, which will be detailed in the Authority's Business Plan to be published next week.
The Financial Risk Outlook highlights a number of priority risks including the need for people to take greater individual responsibility for long-term financial provision, the popularity of some consumer products that are very complex, and the need for rigorous risk management by firms of complex and relatively illiquid instruments.
The Outlook also considers three variations on a central scenario of sound domestic and global economic performance in the year ahead.
FSA chairman Callum McCarthy said: “Over the last year, UK firms and consumers have benefited from a relatively benign economic environment.
“Over the next year most commentators expect this to continue, with a slowdown in the property market, more moderate growth in household consumption, relatively low interest rates and growth in business investment.
“We take this as the central scenario case against which the FSA is planning.
“Despite this central case there are important long and short-term risks which firms and their customers need to address. People are having to take increased responsibility for their pensions and other long-term financial arrangements.
“The products designed to meet these needs are sometimes difficult to understand and explain. They are being sold by an industry undergoing significant structural change.
“The financial industry, too, is dealing with more complex instruments that produce operational, credit and liquidity risks.
“The Outlook illustrates the high degree of uncertainty around the generally positive economic outlook. It is important that firms allow for these uncertainties in their plans and that the current environment does not lead to complacency."
The Financial Risk Outlook can be viewed at www.fsa.gov.uk
