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FSA admits huge risks in principle-based regime

The FSA says there are huge risks and barriers ahead for the industry and regulator before a principle-based approach is successfully implemented.

Speaking at the Mortgage Expo, head of mortgages and credit unions Michael Lord said there was genuine concern from industry, consumer groups and the regulator about implementing the regime.

But Lord said regulating through the 11 proposed principles rather than a prescriptive regime is the only sensible way forward to ensure appropriate regulation.

He said the FSA would look to address the danger of the FOS being handed a huge rise in power and influence under the new regime by laying down precedents though its rulings that could rewrite the rulebook.

Lord said: “There are huge risks and hills to climb in implementing this principle-based regulation. This approach carries risks.”

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