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FSA pledges plain principles

The FSA claims that its transition to a principles-based approach will not make its regulatory regime more unpred- ictable for firms.

The regulator plans to move away gradually from detailed rules towards high-level principles and guidance and has published on its website a list of 30 proposed improvements to the way it regulates.

Improvements include cutting unnecessary regulation, more flexible rules for collective investment schemes, enc-ouraging industry solutions for problems relating to soft commission and further simplifying the conduct of business rules next year.

But the FSA insists the transition to high-level principles will not make the regime more unpredictable and the rules more difficult for firms to comply with. It says it will continue to provide guidance to firms and take action against companies only where there is a clear breach of the principles.

It has also pledged not to gold-plate EU directives such as the Markets in Financial Instruments Directive, which is scheduled to come into force in 2007.

The FSA’s cost of regulation study, carried out by Deloitte and due for publication early next year, has been delayed until the second quarter. The regulator says the survey was more complicated than envisaged and it needs to collect more information from firms.

Chief executive John Tiner says: “A shift towards a more principles-based approach will take time to implement as much care will be needed to ensure we retain rules that clearly add value in maintaining efficient orderly and fair markets or helping consumers secure a fair deal.”

Unity Independent Finan-cial Planning company director Jon Willis says: “There is a danger that this will lead to greater ambiguity in the rules. I would prefer to know exactly what I have to do.”


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