FSA should avoid ‘lengthy rule book’ says ICAEW

The Financial Services Authority needs to avoid drawing up a ‘lengthy rule book’ in response to the financial crisis and instead adopt a principles based approach in its reform of banking regulation.

In it’s submitted response to the Turner Review, the ICAEW said the City regulator should instead address operational failings as well as weaknesses in system design and regulatory policy. It should also strive to avoid losing the positive aspects of the work it had previously undertaken from the pressure to change.

‘The arguments that the FSA should move towards a more principles-based approach remain valid not least in that such an approach deals better with changing financial markets than a lengthy rule book,’ said PwC partner and chair of the ICAEW Financial Service Faculty’s Risk and Regulation Committee, John Tattersall.

Iain Coke, head of Financial Services Faculty, added: ‘Communication, cooperation and coordination between the tripartite authorities can, and should, be improved. It is vital, however the system is structured, that it is made to work effectively at both policy and operational levels. Part of the solution here is for there to be closer dialogue between the FSA and the audit profession on systemic risks.’