The Financial Services Authority (FSA) has published its annual report for 2010/11, outlining its performance against the priorities set out in its 2010/11 Business Plan and its statutory objectives.
In his foreword, FSA chairman, Adair Turner, describes the regulator's progress in preparing and implementing the structural changes announced by the Chancellor in his Mansion House speech in 2010. He emphasises the achievements of the FSA during the last year and the organisation's continued focus on delivering its objectives.
Adair Turner, FSA chairman, said:
"The past year has seen further progress on the major changes in regulatory and supervisory approach already underway at the FSA, alongside our preparations for the structural changes announced by the government last June. We will remain focused on our statutory objectives until the formal move to the new structure and have continued to make strong progress in delivering our priorities. This wouldn't have been possible without the commitment and professionalism of our staff.
"It is also important to recognise that there is still a great deal of regulatory work to be completed at an international level. We will continue to be at the forefront of that process, which will build on much of the work we have delivered here in the UK since the financial crisis."
Hector Sants, FSA chief executive, said:
"Over the last 12 months, the FSA has continued to operate in a climate of economic fragility. Our principal focus has thus been on maintaining the high level of supervisory activity required to ensure the stability of firms in the system.
"In addition we made considerable progress in advancing our new proactive approach to consumer protection while undertaking the necessary work to prepare for the regulatory reforms."
The Annual Report highlights four main areas of progress:
1. The FSA's progress in executing a credible deterrence and enforcement approach throughout 2010/11, including:
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five criminal convictions for insider dealing with sentences ranging from 12 months to three years and four months;
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15 penalties levied for market abuse, totalling £8,342,804; and
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13 defendants currently awaiting trial for insider-dealing offences with trial dates fixed for November 2011, February 2012 and April 2012.
2. The launch of a radically new approach to the protection of retail customers, with a willingness to intervene earlier, as highlighted by:
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Securing greater redress for consumers, as highlighted by recent legal proceedings surrounding the complaints handling by institutions of payment protection insurance;
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the publication of our first Retail Conduct Risk Outlook , illustrating how we will seek to identify emerging market developments that could pose risks to consumers, which will help us to focus resources on those risks; and
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continuing to progress our work on major policy initiatives such as the Retail Distribution and Mortgage Market Reviews.
3. The continued development of a more intensive approach to prudential supervision; as demonstrated by
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strengthening our capital regime by establishing a comprehensive stress-testing framework;
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working closely with firms to require them to embed reverse stress testing into their business models; and
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implementing new European rules on remuneration, and therefore increasing the number of firms covered by the rules from 26 to 2,700.
4. Continued progress in developing new global standards of prudential banking regulation by;
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securing senior representation on all of the three new European Supervisory Authorities in order to play an active role on behalf of the UK in European regulation;
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working, through the Financial Stability Board and the Basel Committee, to develop the new prudential regulatory framework, particularly on capital, liquidity and resolution; and
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working to ensure effective implementation in Europe of the Solvency II directive (for insurance) and the forthcoming CRD IV which will implement Basel III.
Concluding on the Annual Report, Hector Sants, said:
"Overall we have made good progress against our objectives, within budget, and this is demonstrated by our achievements against the milestones we set out in our Business Plan. I want to express my personal thanks to all our staff for their hard work in achieving this outcome."
Additional statistical information on the FSA's work during 2010/11 can be found in the appendices in the report published today, together with the Enforcement Annual Performance Account which sets out details of the FSA's enforcement work.
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