The FSA said the financial industry faces a “high degree of uncertainty” in its Financial Risks Outlook 2005 published today.
The report outlines the risks the FSA said are facing the financial sector in 2005.
Among other priority risks identified by the report are:
·Changes in the distribution of retail financial services and the introduction of basic advice in the sale of stakeholder products. There is a risk that benefits arising from greater competition and access to advice could be impeded if compliance standards slip
·The need for firms to manage financial and operational risks carefully to keep up with the pace of financial innovation
·In the current benign economic environment there is a danger that firms may relax controls or enter into excessively speculative investments
·Threats to business continuity, including terrorist threats
FSA chairman Callum McCarthy said: “The outlook illustrates a high degree of uncertainty around the generally positive economic outlook.
“It is important that firms allow for these uncertainties in their plans and that the current environment does not lead to complacency.”
