With the regulator in the process of updating its guidelines to a principles-based regime, Clive Briault, managing director of retail markets at the FSA, said that the changes were needed.
He explained: “An ever-expanding rule book, full of detailed rules, would suggest that we are only treating the symptoms of market failure while neglecting the
root causes.”
In preparation for the changes, the FSA has made a number of changes to its set up, with extra funds being channelled towards improving key infrastructure and the training and development of the organisation and its staff. The FSA has also admitted that much of the change will fall on the firms’ senior management to
implement.
However, Peter O’Donovan, mortgage manager at Bestinvest, argued that the move to a principles-based approach could lead to more confusion in the market.
He said: “We are almost operating under principles already. It is up to brokers to read the rulebook and then decide how to implement it. The danger could be that following the move to a principles-based approach, intermediaries could decide on a course of action that the FSA doesn’t agree with. It could be the case that the mortgage market becomes open to a lot of fines and fees from the FSA following the move if the rulings aren’t correctly
implemented.”
