FSA – COMPETENCE AND ETHICS CONSULTATION PAPER

Consultation Paper 10/12 “Review of Competence and Ethics” sets out proposals to:

• Make changes to the Training and Competence (TC) sourcebook including modernising our qualifications framework, the Statements of Principle and Code of Practice for Approved Persons (APER) and the Senior Management Arrangements, Systems and Controls (SYSC) sourcebook; and

• Clarify the ethical behaviours FSA expect from individuals operating as approved persons.

FSA has increased scrutiny of the competence of all individuals within the financial services industry over the last few years. Examples that impact smaller firms include:

• The Retail Distribution Review (RDR) work on professionalism (a Consultation Paper is due on this in June 2010); and

• Proposals in our Mortgage Market Review to bring individuals into the approved persons regime (a Policy Statement is due on this in June 2010).

The proposals in this CP complement this work and aim to strengthen and clarify overall competence and ethics requirements. FSA propose to:

• Introduce an overall time limit within which relevant individuals must successfully pass all modules of a qualification as prescribed by FSA rules;

• Remove the existing transitional provisions for designated investment business that have been in force since the Financial Services and Markets Act 2000 was passed;

• Review some of the activities in Appendix 1 of the TC sourcebook;

• Publish a qualifications list that meet regulatory requirements within the Handbook;

• Clarify expectations about the responsibility for competence in the approved persons regime; and

• Add additional descriptions of behaviour which, in FSA opinion, do not comply with APER and consult on applying them across the approved persons regime.

FSA propose adding clarification text to the code of practice that appears under the Statements of Principle (contained in the APER sourcebook) – this will cover:

• Paying due regard to the interests of customers; and
• Deliberate acts, omissions or business practises that could be reasonably expected to cause consumer detriment.


Source: Financial Services Authority

FSA Website

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Source: The Consulting Consortium
TCC Website

LLOYD’S – ACTIVE HURRICANE SEASON ON THE WAY

Insurance company balance sheets could be in for a battering this summer if the latest predictions of the world’s hurricane watchers are accurate. Three top hurricane forecasters agree that the 2010 hurricane season, which starts early June, will be an active one, possibly on a par with 2005 which had 28 named storms.

That year insurers and reinsurers had to ride out the triple whammy of hurricanes Katrina, Rita and Wilma, which collectively left them with a bill for well over $60 billion. Washington-based National Oceanic and Atmospheric Administration (NOAA) said last week that it is expecting “an active to extremely active” season for the Atlantic Basin in 2010.

Across the entire Atlantic Basin for the six-month season, NOAA is projecting a 70% probability of the following ranges:

• 14 to 23 named storms (top winds of 39 mph or higher), including:
• Eight to 14 hurricanes (top winds of 74 mph or higher), of which:
• Three to seven could be major hurricanes (Category 3, 4 or 5; winds of at least 111 mph)


Source: Lloyd's of London

Lloyd's Website

ABI – TIM BREEDON TO BECOME CHAIRMAN

Tim Breedon, Group Chief Executive of Legal & General has been nominated to become the next Chairman of the ABI. Mr Breedon will be formally appointed at the Association’s AGM in July when Archie Kane will step down as Chairman having completed a three year term of office.

Tim Breedon has been Group Chief Executive of Legal & General since January 2006, having joined the L&G Board in 2002. He has been a member of the ABI Board since July 2007.

Tim Breedon said:

“It is an honour to be asked to become ABI Chairman at this vital time for the insurance industry. The insurance sector was not part of the problem for financial services and the broader economy last year: it weathered the storm of the financial crisis well. Insurers can however be part of the solution."

"Insurance is already at the heart of a successful and well-functioning society - we price and manage risks for consumers, businesses and governments, enabling individuals to live their lives to the full and economies to grow through the long term investment the industry provides. There is however much more we can do to assist individuals, families, businesses and the economy towards recovery. As an industry we have to continue to improve our reputation with consumers, demonstrate our value to governments and work with regulators to ensure we are operating effectively."

"We face major challenges from regulators and governments, particularly in ensuring insurance is not treated as banking, but I am confident that the ABI will continue to engage constructively in the important debates still to come.”


Source: Association of British Insurers

ABI Website

BIS – AN END TO EXCESSSIVE REGULATION

Business Secretary Vince Cable has announced an action plan to bring an end to the excessive regulation that is stifling business growth. He detailed the first phase of the Coalition Government’s action plan to reduce regulation following the Prime Minister’s commitment last week to “re-open Britain for business”.

The action plan:

• Creates a new Cabinet “Star Chamber” that will lead the Government’s drive to reduce regulation which is stifling growth, especially of small businesses. This Reducing Regulation Committee will be chaired by the Business Secretary and will enforce a new approach to new laws and regulations, ensuring that their costs are being properly addressed across the entire British economy.

• Announces an immediate review of all regulation in the pipeline for implementation which has been inherited from the last Government. The cost of implementing this amounts to £5bn annually before April 2011 and £19.1bn per annum thereafter. This will be the first action for the new Cabinet committee.

• Establishes a new “challenge group” to come up with innovative approaches to achieving social and environmental goals in a non-regulatory way. This team would work with experts including Richard Thaler, the US behavioural economist.

• Introduces a new approach that will control and reduce the burden of regulation. A “one-in, one-out” approach, designed to change the culture of government, would make sure that new regulatory burdens on business are only brought in when reductions can be made to existing regulation.

Vince Cable said:

“The deluge of new regulations has been choking off enterprise for too long. We must move away from the view that the only way to solve problems is to regulate. The Government has wide-ranging social and ecological goals including protecting consumers and protecting the environment. This requires increased social responsibility on the part of businesses and individuals."

“This is a real challenge and it will not be easy. We need to reduce regulation and at the same time meet our social and environmental ambitions. This demands a radical change in culture away from the tick box approach to regulation only as a last resort. It’s a big task but one worth striving for.”

The Reducing Regulation Committee will stress-test regulatory proposals making sure that only those of suitably high quality (for example meeting good regulation principles) and suitably high priority proceed.

‘One-In – One-Out’ is a regulatory management system, whereby any new regulatory cost is compensated by cuts to the cost of old laws, and that the cut in regulatory cost must be greater than the cost of the new regulation.

The Better Regulation Executive is responsible for implementing the regulation agenda at the Department for Business Innovation and Skills, and works across government to improve the way new laws and regulations are created, cutting away unnecessary red tape and being fair to business.

The “Forward Regulatory Programme” published in March by the Better Regulation Executive identified 200 new regulations that departments were planning to bring in between May 2010 and April 2011 with a cost of over £5 billion, and over 20 new regulations beyond April 2011 with individual costs of over £50 million and total costs of about £19 billion.

The intended small “challenge group” will encourage an imaginative approach to non-regulatory alternatives to regulatory proposals presented by Departments to the Reducing Regulation Committee. The longer term aim would be to change the culture and for Departments to propose non regulatory solutions.


Source: Department for Business, Innovation and Skills

BIS Website