Principles of good regulation, Financial Management

Principles of Good Regulation

While performing its functions, the FSA needs to take into account certain matters which are termed the ‘principles of good regulation'. The matters like:

  1. Efficiency and economy: The use of the available UK resources in the most efficient and economic way.
  2. Risk management and controls within firms: A firm's senior management is responsible for its activities and for ensuring that its business complies with regulatory requirements. Thus, FSA may hold the senior management responsible for risk management and controls within firms.
  3. Restrictions and benefits: The restrictions imposed on the industry shall be proportionate to the benefits that are expected to result from those restrictions.
  4. Innovations and regulations: Allowing scope for different means of compliance so as not to unduly restrict market participants from launching new financial products and services.
  5. International character of financial services and the competitive position of UK: The cooperation with the overseas regulators in order to meet the international standards and to monitor global firms and markets effectively.
  6. Rules and practices on competition: Minimizes the adverse effects on competition that may arise from its activities and the desirability of facilitating competition between the firms which it regulates.

In addition to its statutory objectives, FSA also has other objectives like:

  • Political and Public Accountability: The annual report contains an assessment of the extent to which it has met these objectives. Scrutiny of the FSA by Parliamentary Committees may focus on how it achieve its objectives.
  • Exhibiting the Way it Carry Out our General Functions: For example, it is duty bound to show how the draft rules relate to its statutory objectives are beneficial to the consumer.
  • Assisting in Providing Legal Accountability: The reason is if it interprets the objectives wrongly, or fail to consider them, it can be challenged in the courts by judicial review.


Posted Date: 9/11/2012 2:39:33 AM | Location : United States

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