FSA admits weakness of 'principles-based' regulation

Speaking about the future of regulation and supervision, Sants says the phrase 'principles-based' has been misunderstood, adding it "does not work with individuals who have no principles." He adds in the future, a better use of resources will be through 'mystery shopping' and branch visits rather than detailed reviews of management information. "To suggest that we can operate on principles alone is illusory particularly because the policy-making framework does not allow it," he says. "Furthermore, the limitations of a pure principles-based regime have to be recognised. I continue to b...