The Financial Services Authority (FSA) has announced changes to its supervisory approach, which aim to improve its Arrow risk framework, the way it manages relationships with firms and how it deals with general correspondence.
The regulator says it is reviewing and improving its risk-based approach (Arrow) to firm supervision and to its thematic work, which is used when assessing risks involving several firms or which relate to the sector as a whole.
Specific changes the FSA is making include:
- A revised model (Arrow II) allowing supervisors more accurately to reflect their assessment of risk in individual firms or through cross-firm thematic work;
- Better communication with firms on its assessment of them and getting them more involved in the process. For example, Arrow risk assessment letters have been extensively revised so there is more focus on the main issues and what the FSA expects firms to do about them;
- Improved training and guidance for supervisors, plus better expert analysis of sectoral risks and issues to make supervisors more effective; and
- Streamlined internal processes and improved IT support to make the overall framework more efficient.
The FSA is raising awareness of the forthcoming changes to its approach through industry seminars and other communications, and it also plans to provide detailed guidance to firms on its website in May.
Following proposals made in its 2005/06 Business Plan, the FSA has also written to regulated firms explaining what it expects from them and what firms should expect from the FSA.
The information covers compliance to the FSA’s principles and rules for authorised firms, adherence to its service standards, and what firms can expect if they have a designated 'relationship manager'.
Firms are assigned a relationship manager if the FSA judges the firm to have a significant impact on its statutory objectives. To ensure relationship managers meet relevant criteria, the regulator’s senior management will conduct one-on-one meetings each year with a sample of relationship-managed firms.
The FSA is also making changes to improve its general correspondence with firms:
- From 1 April it will implement a new external standard for dealing with general correspondence (faxes, emails and letters) including requests for individual guidance; and
- It will give a substantive reply to 90% of correspondence within 12 working days.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
Developed by industry-wide group
Joined in 2002
'Educate clients' children'
Raised £15m earlier this week
From 8pm Friday 19 October