The Financial Services Authority has today laid out its plans to foster greater use of Industry Guidance as it moves towards a more principles-based approach to regulation.
Industry guidance includes codes of practice and similar statements generated by trade associations and professional bodies to help their members understand and follow good practice in meeting regulatory requirements.
A discussion paper sets out the FSA's thinking on the role of industry guidance in a more principles-based regulatory structure. The paper:
• recognises that industry guidance is not new, but already exists in different parts of the regulatory system;
• makes clear that industry guidance will supplement rules not replace them;
• sets out a standard process for FSA to recognise industry guidance;
• makes clear the standards that will be applied in recognising such guidance; and
• confirms that the FSA will not take action against a firm which has complied with recognised guidance covering the issue concerned.
FSA general counsel Andrew Whittaker said: "These proposals will contribute towards more principles-based regulation by allowing us to focus on the main principles to be achieved, rather than the detail of how to comply with them. They will give firms guidance on ways of complying with FSA principles and rules, but in a way that should stimulate flexibility and innovation in meeting higher level standards."
The FSA is looking for comments and feedback by 31 January 2007.
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