Taking over responsibilities for conduct regulation early next year, the FCA will aim to enhance the FSA’s existing credible deterrence strategy, using new powers of intervention and enforcement.
However, answering some frequently asked questions on the transition to the FCA, the FSA insisted the new regulator would not try to judge past actions on new rules.
“We won’t be a retrospective regulator – and we will judge what firms have done based on the rules and principles that were in place at the time,” it said.
“So we will judge actions from five years ago based on what the rules were five years ago. An example of this is interest rates swaps – where we’ve assessed firms’ behaviour against the rules that were in place when the products were sold.”
More details on how the FCA will go about regulating the industry are expected in an approach document, set to be published in October.
Meanwhile, the FSA also refused to give any guarantees that costs for regulated firms would not rise under the new system.
“It is impossible to say at this stage. But our aim is to ensure the FCA is value for money and uses its resources in the best way to meet its priorities,” it said.
The Financial Services Bill, which will split the FSA up into the FCA and Prudential Regulation Authority, is currently making its way through Parliament. It is set to gain Royal Assent by the end of the year.
