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FSA sets out proposals for stripped down T&C handbook

The FSA has set out proposals for a shorter and more outcome-focused training and competence sourcebook that will apply only to retail firms and business.

This is part of the FSA’s drive to simplify and streamline its handbook and remove prescriptive requirements. The new T&C regime will be founded on high-level rules and guidance but will retain exam requirements for retail business, which are still seen as essential to protect consumers.

The new regime will consist of a single high-level competence requirement which will apply to all UK authorised firms, including wholesale firms. This will be supported – for retail firms only – by a simpler T&C sourcebook, approximately one-third the length of the existing one. We have decided to keep the existing compulsory examination requirements for specified retail activities and the ‘safe harbour’ for firms who use exams taken from the Financial Services Skills Council (FSSC)’s list of appropriate examinations.

The longer-term aim is to be able to remove the T&C sourcebook altogether and rely on high-level competence requirements across all sectors. However, this will not happen until the FSA is satisfied that firms have in place effective ways of achieving appropriate and consistent standards in the T&C area. The FSA will keep the position under review.

The FSA is already committed to disapplying its detailed T&C rules for wholesale business and to making the changes needed to ensure that this regime complies with the Markets in Financial Instruments Directive.

All the proposed changes to the T&C regime will come into force on 1 November 2007, when MiFID is implemented.

FSA director of retail policy Dan Waters says: :

“Our proposals are the result of a ‘blank sheet of paper’ review of our T&C regime. This is all part of our move to more principles-based regulation. As with the changes we’re proposing for the Conduct of Business sourcebook, we believe the new T&C regime will give firms more flexibility to achieve the outcomes we want in a way that suits them best. The new T&C Sourcebook is much simpler, shorter and more user-friendly. There is, though, no question of lowering the competence standards we expect of firms and their staff – these play a key role in protecting consumers.”


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