New FSA rules allowing firms to seek approval from the regulator for internal guidance produced for their members came into effect today.
The development means a company can avoid FSA action if shows it has followed its own ‘confirmed’ guidance.
Trade associations and professional bodies can also apply for guidance approval under the new rules, which the FSA says are an important step in the move towards principles-based regulation.
It recently confirmed three sets of guidance by MiFID Connect – a group of trade associations formed to prepare guidance on the implementation of the Markets in Financial Instruments Directive.
FSA director of strategy and risk, Verena Ross, says: “Trade associations and others have for many years provided guidance on regulatory matters for their members.
“This new formalised system involving FSA confirmation will contribute towards the move to principles based regulation, allowing us to focus on the main principles to be achieved.
“Industry guidance will give firms help and advice on ways of complying with FSA principles and high-level rules, in a way that should not only stimulate flexibility and innovation but also tailor the advice to different sectors.”
The FSA first set out the role of industry guidance, and the standards that will be applied by the FSA in recognising it, in a paper published at the end of last year. It received 65 responses most of which, it says, supported the FSA’s stance.
It sets out the process for bodies to follow in seeking FSA confirmation for particular sets of guidance and describes the confirmation criteria the FSA has set up to ensure that confirmation requests are dealt with quickly and consistently.
The FSA confirms guidance will supplement FSA rules - not replace them - and that although its use is encouraged, it is entirely up to industry bodies whether to take forward initiatives of this kind.
In addition, it adds it is not a move to strip the Handbook of necessary guidance and says it will continue to produce guidance where required.
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