We must consider the principles of good regulation when carrying out our work. And regulated firms must adhere to the principles for businesses, which are their fundamental obligations as set out in our Handbook.
The principles of good regulation
1. Efficiency and economy
We are committed to using our resources in the most efficient and economical way. As part of this the Treasury can commission value-for-money reviews of our operations.
We must ensure that any burden or restriction that we impose on a person, firm or activity is proportionate to the benefits we expect as a result. To judge this, we take into account the costs to firms and consumers.
3. Sustainable growth
We must ensure there is a desire for sustainable growth in the economy of the UK in the medium or long term.
4. Consumer responsibility
Consumers should take responsibility for their decisions.
5. Senior management responsibility
A firm’s senior management is responsible for the firm’s activities and for ensuring that its business complies with regulatory requirements. This secures an adequate but proportionate level of regulatory intervention by holding senior management responsible for the risk management and controls within firms. Firms must make it clear who has what responsibility and ensure that its business can be adequately monitored and controlled.
6. Recognizing the differences in the businesses carried on by different regulated persons
Where appropriate, we exercise our functions in a way that recognizes differences in the nature of, and objectives of, businesses carried on by different persons subject to requirements imposed by or under FSMA.
7. Openness and disclosure
We should publish relevant market information about regulated persons or require them to publish it (with appropriate safeguards). This reinforces market discipline and improves consumers’ knowledge about their financial matters.
We should exercise our functions as transparently as possible. It is important that we provide appropriate information on our regulatory decisions, and that we are open and accessible to the regulated community and the general public.
The principles for businesses
A firm must conduct its business with integrity.
2. Skill, care and diligence
A firm must conduct its business with due skill, care and diligence.
3. Management and control
A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.
4. Financial prudence
A firm must maintain adequate financial resources.
5. Market conduct
A firm must observe proper standards of market conduct.
6. Customers' interests
A firm must pay due regard to the interests of its customers and treat them fairly.
7. Communications with clients
A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.
8. Conflicts of interest
A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.
9. Customers: relationships of trust
A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment.
10. Clients' assets
A firm must arrange adequate protection for clients' assets when it is responsible for them.
11. Relations with regulators
A firm must deal with its regulators in an open and cooperative way, and must disclose to the appropriate regulator appropriately anything relating to the firm of which that regulator would reasonably expect notice.