Speaking at the Mortgage Business Expo in Manchester, Michael Lord, head of mortgages and the credit union at the FSA, said the regulator was stepping up its principles-based approach to regulation.
He said: “A principles-based approach is already used in ‘Treating Customers Fairly’ (TCF) and money laundering, and most of the intermediaries we speak to think this is better than going through a 9,000 page rule book.”
However, Lord admitted the move to being principles-based had its problems. “Moving to a principles-based approach carries risks and broker will wonder about a lack of certainty over what the FSA wants. Interpretation of the guidelines is also an issue, while the role of the Financial Ombudsman has been questioned.”
He hoped the move would help broker innovation and promote entrepreneurialism within the broker community, allowing brokers greater freedom. Speaking at the event, Lord revealed the FSA would also be looking at the appointed representative market, training and competence, in addition to reviews of the self-cert and lifetime markets. Improving consumer knowledge was another area the FSA was keen to get involved with, but Lord admitted: “Consumer responsibility is still an issue, but within the next two years there will be more of a focus on financial knowledge, with some questions in the Maths GCSE exams.”
Last month, the Regulatory Law Committee of the City of London Law Society wrote to the FSA and expressed its concern over a move to a principles-based approach.
