‘Regulation being privatised by FSA’

The FSA is effectively proposing to privatise regulation, according to a leading financial services lawyer.

CMS Cameron McKenna partner Simon Morris says last week’s FSA discussion paper on how trade body guidance can supplement FSA high-level rules could create a confused landscape with a number of pseudo-regulators emerging.

Morris says the proposals could herald the return to a cottage industry approach to regulation akin to 20 years ago.

The FSA’s discussion paper says industry guidance should supplement not replace FSA rules but the regulator could give a stamp of approval to any supplementary trade body guidance.

Morris says: “I am very uncomfortable about what the FSA has planned with regard to industry guidance. It looks like the privatisation of regulation, with the FSA removing itself from its regulatory role and asking someone else to provide it.”

FSA spokesman Robin Gordon-Walker says: “We will not be looking to outsource or privatise regulation and cannot, due to regulatory responsibilities. The creation of industry guidance is a matter for industry which will then be followed by FSA recognition on a case-by-case basis.”

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