The report details how the FSA performed during the year against its statutory objectives and how it has delivered outcomes for both firms and consumers under the three headings which cover all the FSA's work: to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.
In his introductory statement, Lord Turner, chairman of the FSA, said that since mid 2007, confidence in the global banking system has suffered a dramatic collapse and clearly this has implications for finance ministries, central banks and regulators.
Lord Turner said: "The year 2008/09 has been an extremely difficult one for regulators across the world. Looking at the year as a whole, I believe the FSA has dealt successfully with the immediate crisis, and taken actions to ensure that we build a more stable financial system for the future."
In his report the FSA chief executive Hector Sants summed up the year by saying: "It is critical to understand that the individual firm problems we have seen emerge in the last year had their origins in the boom, and were not reversible in the current market conditions. Our objectives in the past 12 months have been to minimise the impact of these weaknesses and to lay the foundations of a more effective and better regime for the future. I believe we have made good progress in extremely difficult conditions in pursuit of these goals.
"I hope we have begun the process of rebuilding confidence in the system and the regulator by demonstrating that we are an organisation that is willing to learn and that we have the ability to change radically. I believe enduring and respected organisations are forged in times of adversity and that this will ultimately be seen as such a time for the FSA."
The key element of radical change has been the implementation of the Supervisory Enhancement Programme. In this respect the key points are:
The increase in the supervisory staff from 526 to 703;
The FSA began changing the authorisation process for Significant Influence Functions (SIFs) to ensure it was judging the competence and regulatory knowledge of senior people at firms as well as their probity;
The FSA reorganised and strengthened its risk identification and mitigation capacity;
The FSA revised its supervisory risk assessment framework to include greater focus on business models; and
The FSA increased its engagement with auditors and investors to emphasise their role in the oversight of firms.
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:
The FSA's enforcement division closed 302 investigations during the year resulting in 371 outcomes. Of these, 243 concluded with the use of powers (such as prohibition, financial penalties and variations of permissions) and 128 without the use of powers. 30 of these 128 outcomes were private warnings.
The FSA levied £27.3 million in financial penalties during the year compared to £4.4 million last year and prohibited a record 58 individuals from carrying out regulated activities compared to 30 the year before. This reflects the FSA's more proactive approach to enforcement - the credible deterrence philosophy - set out last year.
Of the 59 targets the FSA set itself for 2008/09, 39 were delivered on schedule. Of the other 20, 10 were re-planned but still delivered in the 2008/09 financial year and 10 are still to be delivered.
The number of regulated firms decreased from 28,325 to 27,340.
The number of approved persons decreased from 172,077 to 166,420.
