News Archive

The presentation by the FSA to APCC members is now available for download by members.

Member firms are now able to download the presentation by the FSA during the interactive workshop on the use of platforms by intermediaries.

The presentation from the compliance consultants training session on 3 September is now available for download from the members area.

The FSA are holding a series of compliance consultants training seminars focussing particularly on TCF.  The presentation from the seminar held on 3 September is now available for members to download.

As a result of the success of the first FSA  training seminars for compliance consultants the FSA will be holding repeat training seminars in September and October. 

We are pleased to announce that the FSA has recently confirmed  that they will be holding more seminars in September and October specifically for compliance consultants.  The seminars are available for all compliance consultants and they are being organised by the Events Team in conjunction with the Small Firms Division in Edinburgh.  As advised previously, the format has been driven by the FSA in consultation with the APCC. This is the first time such an approach has been adopted and represents a clear message as to how important the FSA views the role of the compliance consultant and the role of the APCC.

 
The seminars will be held as follows:

19 September                Manchester
7 October                      London
8 October                      Newport
9 October                      Livingston

 
The content of these seminars will follow those held previously so if you have already attended an FSA  training seminar on either 24 July or 3 September you may not find any new material. Click here for more information.  Spaces are limited so we recommend you book early to avoid disappointment.

The APCC has stressed the need for these sessions to be detailed so that all parties will go away having experienced an interactive and thought provoking session that provides consultants with a clearer understanding of the FSA's operational approach and gives the FSA a clearer understanding of the operational role of the consultant.

The APCC is delighted to offer all APCC members a discount of £50 per firm for attendance on one of the seminars. This discount cannot be offered via FSA so you will be required to pay the fee (£250 pp) in full to FSA. To receive your £50 discount please email your confirmation of registration to jo.stephens@apcc.org.uk and your firm's bank details so that the discount can be paid direct.

The APCC, in association with Steve Tully and Rory Percival from the Retail Policy & Themes Division at the FSA, are holding an event to discuss the FSA's policy on the use of platforms by intermediaries.

The APCC, in association with Steve Tully and Rory Percival from the Retail Policy & Themes Division at the FSA, are holding an event to discuss the FSA's policy on the use of platforms by intermediaries.  This event is open to delegates from APCC members only.

The topics that will be covered include:

- the areas of training and competence;
- systems and controls;
- changes to business models;
- managing conflicts of interests;
- suitability & acting within scope of permissions; and
- the related matter of distributor influenced funds.

In addition the session will also give APCC members an opportunity to ask questions regarding the above.

Location: 117 Houndsditch, London, EC3A 7BT
Date: 11 September 2008
Time: 11.30am to 1pm followed by buffet lunch
Cost: £50 per delegate to cover administrative costs

Places are limited to 15 and this event is now full. If you are from an APCC members firm and would like to attend please email Jo Stephens on jo.stephens@apcc.org.uk for a cancellation standby.

The APCC met representatives of the FSA on 28 May as part of the biannual meetings between the FSA and recognised trade bodies.  Members can now access the summary of the meeting and the answers to the questions submitted.

The meeting on 29 May was the first chance for the APCC to meet Lesley Titcomb in her new role as Director of Small Firms and Contact Division, Retail Intermediaries Sector Leader.  The APCC looks forward to building an effective relationship with Lesley and is heartened that the pivotal role of consultants for regulated firms continues to be recognised by the FSA.

Members can now access the summary of the meeting and the answers to the questions submitted. 

As a result of an APCC initiative the FSA is now providing training specifically for compliance consultants.  The main focus for the training is TCF but the APCC is working with the FSA to extend the scope of this training.

The FSA has recently confirmed two seminars to be held this summer specifically for compliance consultants. We have been in discussion with the FSA about these type of events for several months so are very happy to now see these dates announced. The seminars are available for all compliance consultants and they are being organised by the Events Team in conjunction with the Small Firms Division in Edinburgh. The format has been driven by the FSA in consultation with the APCC. This is the first time such an approach has been adopted and represents a clear message as to how important the FSA views the role of the compliance consultant and the role of the APCC.

These two seminars are a pilot for what will hopefully become a regular occurrence and countrywide as well.

The seminars will be held on the afternoon of 24th July in London and the afternoon of 3rd September in Birmingham and will cover the following:

Introduction

- Why the FSA has decided to hold these seminars;

- What the FSA hopes to achieve;

- Brief discussion on what TCF means;

- Case study.

Virtual visit

This section will include:

- A brief description of who SFCD are;
- Descriptions of the various types of visits to a firm the FSA might undertake – Enhanced Strategy, thematic project work, crystallised risk;
- Information FSA would request from a firm prior to a visit;
- Information FSA would obtain from other sources prior to a visit;
- What a typical visit would look like – meetings with senior management, meetings with advisers, file reviews;
- What FSA would look for on client files;
- Common issues FSA have found.

The APCC has stressed the need for these sessions to be detailed so that all parties will go away having experienced an interactive and thought provoking session that provides consultants with a clearer understanding of the FSA's operational approach and gives the FSA a clearer understanding of the operational role of the consultant.

For more information please visit http://www.fsa.gov.uk/pages/Doing/Events/compliance.shtml. Spaces are limited to 40 delegates so we recommend you book early to avoid disappointment.

The APCC has been approached by a regulated firm seeking a consultant with specialist industry knowledge.

The APCC has been approached by a London based private banking group who are looking for a compliance consultancy firm with experience in private banking compliance issues.  The particular areas where they are currently looking for guidance are treating customers fairly and the opening of accounts for Financial Institutions overseas where the end user is not identified.  In addition to advice when compliance issues arise they are likely to require regular compliance healthcheck reviews and there may be some secondment work.

Following this enquiry the APCC circulated its members requesting members to confirm if they have this specialist  knowledge and would be interested in having their name put forward.  As a result details of 11 consultancy firms were passed to the private banking group.

Representatives from the APCC will be meeting with Lesley Titcomb who is Director of Small Firms Division and Retail Intermediaries Sector Leader at the FSA on 29 May.  The purpose of the meeting is to have a broad ranging discussion on what is happening at the FSA and what is happening within the APCC.

The APCC last met with the FSA in November and as for that meeting the APCC would like input on issues and questions you would like raised with the FSA – in particular is there anything the APCC should be telling the FSA on what is happening at the coalface of regulated firms.

Matters that the APCC raised with the FSA at our last meeting included:

•   The issues that differences in approach between the London and Edinburgh offices and also within the supervisory teams raise for consultancy firms when advising firms
•   How the FSA will monitor the March 08 TCF deadine
•   Guidance given by the FSA to regulated firms when appointing a skilled person
•   Whether the guidance given to intermediary firms on the scope of MiFID was sufficient
•   Does the FSA believe it does enough detailed supervision of regulated firms
•   Concern about the sheer amount of regulatory change
•   The impact of the change in client categorisation rules when marketing investment and EIS schemes

A number of technical queries were also raised with them – please keep these coming.

A particular success from these meetings has been the decision by the FSA to start implementing industry training sessions for consultants which we will be announcing in more detail shortly.  It may be that it takes some time for a practical result to arrive from these meetings which can be frustrating but progress does get made – albeit slowly.

So – if there is any issue or question that you would like raised with the FSA on 29 May, please send details through to the APCC as soon as possible, they will all be treated anonymously so you can be as robust as you feel appropriate. 

The FSA has announced dates for training workshops on integrated reporting for regulated firms that are not subject to the Capital Requirements Directive.

The FSA is holding a series of training sessions in London and Edinburgh on the new financial reports required as from 31 August 2008 for firms not subject to the Capital Requirements/Adequacy Directive.  The training will be relevant for consultants who advise IFAs subject to MiFID and consultants that advise institutional firms.  Details of the training, which is primarily aimed at regulated firms and has not been tailored for consultants, is attached.

The Press Release for the 4th Annual Forum Event held in London earlier this month was released today.

To view the full detail of the Press Release, click here.

The FSA’s new financial promotions website goes live on Friday 28 March.  They have completely restructured the pages so that firms can easily find important and practical information to help them with their advertising and communications. 

Click here to access the FSA’s new financial promotions website.

The new pages include:

• •               Enhanced and completely re-written information on the FSA’s rules and guidance for Mortgages and Home Finance.  The FSA will be adding case studies and updated FAQs on dual regulation areas in coming months, including new process maps with a high level overview of the key policy points firms should consider.

• •               A casework section with examples of issues where the FSA have taken action and why. These will be added to on a regular basis.

• •               Metrics on how the FSA regulates financial promotions and how often the FSA take action. This will be updated on a quarterly basis.

• •               A Rules and Guidance section with individual pages on savings and investments, general insurance and mortgages and home finance with more detail about the key rules in the Conduct of Business Sourcebooks.

• •               New pages on the regulatory framework for financial promotions, why they matter to the FSA, to firms, to consumers, and how the FSA regulate.

• •               A Thematic section for forthcoming reviews (and older ones where the issues on non-compliance or comments on best practice are still relevant).

The full address of the financial promotions website is: <http://www.fsa.gov.uk/Pages/Doing/Regulated/Promo/index.shtml>

The FSA has asked the APCC to obtain feedback from its member firms on how improvements to the RMAR could improve the quality of the information from firms.

A project has recently been set up to look at how improvements to the RMAR could improve the quality of the information from firms, the FSA project team are keen to get the view of APCC members on where they think improvements could be made to the RMAR.

Member firms are asked to send through to the APCC any feedback on the RMAR which they have which could be useful for the FSA to be aware of by close of play on 18th April.  Feedback will be collated by the APCC and sent, on an anonymous basis, to the FSA.

The FSA plans to analyse the APCC feedback with a view to a wider consultation later in the year.  

The 2008 London Forum of the Association was held on 5 March 2008 in the Large Pension Room at the Honourable Society of Grays Inn, 8 South Square, London WC1R 5ET.  

This was a very well attended event and we were very pleased to have seven speakers from the FSA who gave detailed and informative presentations on topical regulatory issues.  After each presentation delegates were able to ask questions of the FSA speakers and to give their views on the issues raised.

The full day of speakers from the FSA, included:

 * A keynote address from Lesley Titcomb the newly appointed Director of Small Firms and Contact Division, and Retail Intermediaries Sector Leader at the FSA
* Paul Hunter, Head of Regulatory Strategy Department at the FSA, speaking on principles-based regulation: issues for consideration
* A session on the risks and issues in the retail intermediaries and asset management sectors
* Arrow II -  a presentation from Joe Traynor, Strategy & Risk Manager at the FSA
* Financial Crime: issues for consultancies by Edna Young, Financial Crime Operations Manager, FSA
* A report on the Association, achievements to date, next steps and future strategy
* The 2008 annual general meeting of the Association

A detailed programme can be viewed here.   Copies of the presentations are available to members in the members area of the website.

The Press Release issued after the event can be viewed here.

The delegate fee (including VAT) was £88.13 for delegates from member firms or the Compliance Institute and £176.25 for other delegates.   
 
The FSA are no longing hosting external events for commercial organisations which unfortunately includes us and that is why we moved the event to the Large Pension Room at the Honourable Society of Grays Inn, 8 South Square, London WC1R 5ET which is two minutes walk from Chancery Lane tube, click here for a location map.  
 

The Steering Council issues a consultation paper on its future strategy.

The Steering Council has been reviewing the role of the APCC within the financial services industry in the light of changes within the market place – in particular the new approach by the FSA contained within the retail distribution review on the need to increase the professionalism of retail firms and the explicit statement of how compliance consultants can assist the FSA in meeting its statutory objectives. 

The APCC believes there is an opportunity now for it to act as the catalyst within the compliance industry to provide independent assurance of robust competency standards for consultancy firms.  These competency standards will enable both the FSA and regulated firms to place reliance on these firms who achieve these standards.  This will enhance the reputation of the APCC and its members within the industry as a whole which will naturally increase the commercial advantage of all APCC members.

The APCC has prepared a consultation paper to its members on this proposal and will be holding a series of regional workshops in November and are planning more in December to discuss these proposals with members.  The APCC plans to complete the consultation process by the end of December and then issue a further document in early first quarter of 2008 for member firms to vote on the proposals contained in it as part of the annual general meeting of the Association in late first quarter 2008. 

Members of the APCC can access a fuller version of this article and the consultation paper by logging into the members area of the website.

This is a copy of the article that appeared in the July 07 edition of Corporate Adviser.

The systemic misadvice revealed in the Alexanders case may be just the tip of the iceberg say compliance experts. John Greenwood of Corporate Adviser examines how widespread poor practice actually is.

Click here for a copy of the article.

The APCC is a member of the IRR Advisory Group. The purpose of the meeting was to update Advisory Group members on changes to the early reporting system, to talk through the pilot project and which firms will be participating in this. In addition there was a demonstration of the user management and registration process for the mandatory electronic reporting system followed by a demonstration of the electronic forms to be used within the system.

The following documents were issued following the meeting

• Meeting agenda
• Draft minutes of meeting
• Draft terms of reference for the pilot project

The Sunday Times published the following article on 17 June 2007 on the threat of a fresh pension scandal which includes a quote from Simon Collins, chairman of the Association.

People who switched to group schemes may have been mis-sold

HUNDREDS of thousands of workers could be embroiled in a new pensions mis-selling scandal because they have been moved out of generous final salary schemes into inferior group personal pensions (GPPs).

Nearly 2m workers are paying into GPPs, which are essentially personal pensions into which employers also make a contribution.

These generally pay a lower pension than final-salary schemes and charges can be high, but many advisers have been recommending firms to switch to GPPs to line their pockets with fat commissions.

Simon Collins of the Association of Professional Compliance Consultants said: “We could be on the cusp of another mis-selling scandal as employees are transferred into GPPs when they should have stayed where they were or been recommended an alternative.”

This warning follows a ruling by the City regulator, the Financial Services Authority, that banned Alexanders, a Swindon independent financial adviser, from certain activities for incorrectly advising 650 staff at a local manufacturing firm to transfer their pensions from deferred membership of a final-salary scheme to a GPP plan.

This raises the spectre of the pensions mis-selling scandal of the 1990s, when salesmen were encouraged by commissions to shift their clients out of valuable final-salary schemes into personal pensions.

Those in final-salary schemes receive a pension based on earnings at retirement but with a personal pension or GPP, retirement income is based on stock-market performance. Members therefore run the risk that the fund will not meet their expectations, whereas with a final-salary plan the employer carries all that risk.

Employers are increasingly trying to shift the cost to workers by closing final-salary schemes. Aon Consulting has estimated that half of employers with such plans could close them to contributions by 2011, trebling the number that have already done so.

GPPs are often unsuitable alternatives because workers tend to be put into poor-performing “default” funds run by life insurers.

Geoffrey Pointon of Pointon York Sipp Solutions, a Sipp provider, said: “By switching to a GPP scheme employees are potentially losing thousands of pounds in retirement savings and in addition, life offices tend to give very poor service, so savers can be left in the dark as to what they are investing in and how their fund is performing.”

There are also concerns that life insurers are abandoning their GPP plans. In March, Clerical Medical closed its GPP business because it said it was no longer profitable.

Jonathan Davies of Reynolds Porter Chamberlain, a pensions solicitor, said: “Group personal pensions offer employees an invidious choice. Many employers will contribute only if the employee joins their GPP, which means staff will lose a substantial payment if they don’t join.”

There is also concern that the government’s Personal Savings Accounts, due to come into force in 2012, may kill off GPPs altogether. Under this plan employers will be compelled to pay in 4% of salaries, with workers putting in 3% and 1% in tax relief.

But worries are growing that employers who now pay more than 4% will reduce contributions when personal accounts go live.

Anyone saving for retirement in a personal pension or GPP – assuming stock-market growth of 7% a year – needs to save 15% of earnings every year for 40 years to be able to retire with 50% of salary.

Those who want to retire on two-thirds of salary need to put away 20% of earnings every year for 40 years.

The FSA dismissed the notion that small firms are under the FSA radar. APCC members continue to support firms both large and small in understanding and meeting their regulatory obligations.

For full details see the FSA press release:

http://www.fsa.gov.uk/pages/Library/Communication/PR/2007/066.shtml

Speaking at a conference for financial advisers, Stephen Bland, Director of Small Firms, warned that a misconception that small retail firms could escape the FSA's attention was wrong and risked tarnishing the industry. The FSA's risk-based approach to regulation enables it to supervise a large number of small firms effectively and assists the regulator to take appropriate action against firms who pose a significant risk to consumers.

The APCC met with Stephen Bland, the Retail Intermediaries Sector Leader at the FSA, on 18 May. The purpose of the meeting was to have a broad ranging discussion on what is happening at the FSA and what is happening within the APCC.

We previously met with Stephen in November and as for that meeting we asked you for input on issues and questions to be raised with the FSA - in particular is there anything we should be telling the FSA on what is happening at the coalface of regulated firms.

Matters that we raised with the FSA at the May meeting included:

• The FSA review of compliance outsourcing.
• Principle based regulation/NewCob
• Regulatory reporting
• Joint workshops on AML and TCF
• Strengthening contacts with the wholesale division of the FSA.
• Various technical queries

A summary of this meeting including the responses to questions and issues raised is now available in the members section of the website.

Clive Briault sets out his thoughts on Principle Based Regulation at a recent ABI conference. APCC members are well placed to advised their clients on how to challenge their compliance procedures to achieve better principle based outcomes.

I want to focus this morning on how I see principles-based regulation moving from theory to practice. Indeed, although we published our paper on "Principles-Based Regulation - Focusing on the Outcomes that Matter" only last month, we have been moving in this direction for a while. As John Tiner explained earlier this morning, our reform of insurance regulation over the last few years has been one example of this. Our Treating Customers Fairly initiative is another.

I will cover four areas:

Outcomes

From firms we want to see a stronger focus on the outcomes that really matter for consumers. We want senior management to develop a greater understanding of how the Principles and our other high-level requirements should apply in practice; to drive and embed change throughout their firms; and to measure that this is delivering the right outcomes. A more principles-based approach also provides senior management with greater flexibility in how they run their business while meeting our requirements, and greater scope to compete and innovate while doing so; or indeed to compete by exceeding our minimum requirements.

So a more principles-based and outcome-focused approach should encourage senior management to focus more on the Principles and the outcomes we want them to deliver; and should therefore deliver these outcomes more effectively.

We also welcome market-led solutions where we use our influence rather than our formal powers to encourage the industry to change. For example, following our challenge to the industry on contract certainty in December 2004, the market has achieved considerable success in tackling the practice of 'deal now, detail later'. This was achieved without the need for any additional rules and guidance from us. Our Retail Distribution Review is looking for market-led solutions to address issues surrounding the availability of advice, sustainability, professionalism and incentives in the distribution of retail investment products. And at a more detailed level, we have been successful in changing industry behaviour on the advertising of general insurance products by discussing our findings with the marketing directors of firms, not just with compliance directors.

For consumers we are working, in partnership with many others, to improve levels of financial capability. We want consumers to be capable and confident in dealing with the financial services industry. And we are looking for ways to encourage consumers to engage more actively when dealing with financial products and services, since it is in their own best interests to do so.

Principles and guidance

Our move towards more principles-based regulation is not about any lowering of our standards. We are not changing our Principles and other high level requirements. Our Principles are themselves rules. They articulate the outcomes we require firms to deliver. Examples include that firms must conduct their affairs with integrity, that firms must pay due regard to the interests of their customers and treat them fairly, and that firms must maintain adequate financial resources.

In terms of our rules and guidance, there are three ways in which we have shifted the emphasis to a more principles-based approach.

First, we have deleted many of our detailed rules. We have deleted our detailed rules on money laundering, and replaced them with some short high-level requirements. We have consulted on a new Conduct of Business Sourcebook for investment business that is half the length and written much more clearly than the previous version. We are consulting on a more principles-based approach to the permitted links regime. And we have announced our intention to consult on a more principles-based and more differentiated approach to insurance conduct of business requirements, where again we want to halve the length of this section of our Handbook. For commoditised insurance products such as household or motor we believe the markets work reasonably well in the interests of consumers - for these products we are looking at removing requirements that go beyond the relevant EU Directives. In contrast we have found greater risk of consumer detriment for those buying personal protection products and so we are considering a small number of additional measures to improve sales practices around these products.

Second, we see scope for imaginative approaches to how the minimum requirements set by our Principles and other high level rules can be illustrated and interpreted. We have already produced a wide range of supporting materials such as statements of good - and of less good - practice; case studies; short guides to our key requirements; self-assessment tools for small firms; and reports of what we have found from our thematic work into various issues. This includes supporting material relating to insurance specific topics such as our guide to brokers on our client money requirements; statements of good and poor practice on consumer friendly statements on the use of discretion in with-profit funds, on selling general insurance products through call centres, and on advertising general insurance products; and various guides to what constitutes good practice when selling or advising on payment protection insurance.

Third, we have consulted on the possibility of our “confirming” guidance developed by the industry that meets our minimum standards and helps firms in areas – hopefully not too many of them - where they want more detail to provide them with a “sturdy breakwater”. Although we have not yet introduced this confirmation process, we have in effect already adopted this approach. There have been two recent examples in the insurance sector.

Following the introduction of our risk-based capital adequacy regime for insurers at the start of 2005, our regime has led to significant improvements in risk management and to the understanding of risk and capital issues by the senior management of firms. In February this year the Association of British Insurers (ABI) in partnership with others published a Guide to the Individual Capital Assessment Process for Insurers. We worked closely with the ABI and other trade bodies to develop this helpful piece of guidance that provides commentary and examples of how firms may achieve our standards and objectives for Individual Capital Assessments.

Our thematic review of unit linked funds found weaknesses in the existing regime in relation to unit pricing and pricing errors. We worked with industry to come up with an industry-led solution and in June 2006 the ABI produced the 'Guide of Good Practice for Unit Linked Funds'. ABI member firms agreed to do a gap analysis of any issues with regards to pricing by December 2006. Firms then started to put remedial plans in place to deal with any issues they have uncovered. Our supervisors are now starting to work with firms to look at the gap analysis, and see if the remedial actions being taken are appropriate and timely.

We also recognise the need to make our supporting materials, and any industry guidance that we confirm, easily accessible to firms.

Investing in our people

Our people, and the way in which they behave, are more important to the success of more principles-based regulation than rewriting our Handbook of rules and guidance. In line with the expectations we are placing on firms, we need to ensure that our people are able to make outcome-focused judgements relating to our Principles, and are able to influence and persuade the senior management of firms through discussions that focus on these high level requirements.

This requires our people to have the right skills, knowledge, capabilities and behaviours. This ranges from our people having a deep and up-to-date understanding of the products, services and markets in which the firms we regulate operate, to our people adopting a genuinely flexible approach to the ways in which firms can demonstrate compliance with the Principles while meeting our desired regulatory outcomes.

We are recruiting and investing in our people accordingly. And I am pleased that we are already seeing some welcome evidence of this in the feedback we have received from both large and small firms, although we recognise that there is further to go here.

Under a more principles-based approach we also need to focus on fewer, higher level and more strategically aligend themes; to join up even more effectively our thematic and firm-specific work so that these are mutually reinforcing; and to communicate clearly to our stakeholders how all of our activities fit together to deliver the outcomes we are seeking.

Treating Customers Fairly

Our Treating Customers Fairly initiative is a specific and long-standing example of our more principles-based approach. This is a key element of our strategy to make retail markets work more effectively and thus to deliver benefits to consumers.

The requirement that firms treat their customers fairly is enshrined in the sixth of our Principles, which states that “A firm must pay due regard to the interests of its customers and treat them fairly.”

Our work in the retail market has consistently found that some firms do not treat their customers fairly. To address this, and given the limitations of detailed rules, we decided four years ago to focus more on the Principle itself; to highlight the areas where customers were vulnerable to unfair treatment; to encourage firms to challenge themselves to ensure that they do treat their customers fairly; and to stress the responsibility of the senior management of firms to deliver this and to demonstrate that they are doing so. This should lead to real and identifiable benefits for consumers.

In July last year we set a deadline for all firms to be at least implementing Treating Customers Fairly initiatives in a substantial part of their business by the end of March 2007 To meet this test, firms needed to show they had allocated appropriate resources and responsibilities, developed plans and processes, and created capability to meet the Treating Customers Fairly principle. The aim was to stimulate action in firms that were slow to appreciate the significance of Treating Customers Fairly; to maintain momentum in those firms that were moving ahead with their Treating Customers Fairly initiatives; and to demonstrate how seriously we take Treating Customers Fairly within our more principles-based approach.

The results that we published earlier this week showed that many firms have made good progress with their Treating Customers Fairly work. The implementation deadline helped to focus firms' efforts on Treating Customers Fairly and generated momentum within the industry as a whole. The proportion of firms that met the deadline varied from 93% of major retail groups and 87% of medium-sized retail firms to 41% of a sample of small firms. Within this, life and general insurance firms were broadly in line with the overall figures.

Only 45% of general insurance intermediaries in our sample of small firms satisfied us that they have reached the implementation stage. This is broadly in line with the overall rate for small firms. More progress clearly needs to be made here, and quickly. Small firms ought to be able make relatively swift progress; we have provided many tools to help them to do so, including our self-assessment tool for Treating Customers Fairly; and we strongly encourage the management of these firms to move ahead on this.

We will increase the focus and intensity of our supervision of firms that missed the end-March deadline. We will take a targeted approach, depending on the reasons a firm failed to meet the deadline, and the scale of the task they face in filling the gap. Our follow-up work is likely to have significant cost implications for these firms.

Beyond implementation, most firms need to go further to reach the embedding phase of Treating Customers Fairly and thereby to deliver fair consumer outcomes consistently. This is, and will continue to be, a significant challenge for most firms, and requires sustained focus from senior management. To reinforce this we have decided to set further deadlines.

By the end of March 2008 firms are expected to have appropriate management information or measures in place to test whether they are treating their customers fairly. And by the end of December 2008 all firms are expected to be able to demonstrate to themselves and to us that they are indeed consistently treating their customers fairly.

So, for the time being, a more principles-based approach does not mean that we will confine ourselves entirely to high-level conversations with the senior management of firms in order to establish that our desired regulatory outcomes are being met. There remains a role for more detailed testing, not least to determine whether the aspirations and intentions of senior management are indeed being translated into putting in place appropriate procedures and into delivering the right outcomes in the customer-facing operations of their firm, especially if firms are not yet testing this. But where firms can demonstrate their own performance (and it is good), there will be less scrutiny by us and therefore a clear regulatory dividend for the firm.

Conclusion

I believe that better outcomes for consumers will be delivered more effectively if the senior management of firms focus on the Principles and our other high level requirements, and if they ensure that these are met throughout their businesses. I look forward to continuing to work with the industry to deliver this.

To access this speech from the FSA website click here.