UK: FSA consults. Again.

When the UK's new Labour government came to power in 1997, they promised to take soundings from those affected by new laws. And it seemed like a good idea. But the volume of consultations is causing a heavy workload in a wide range of businesses, and none more so than those in financial services.

The Financial Services Authority has just announced consultation paper no. 165 and it is 118 pages of detailed proposals for miscellaneous alterations to the handbook, the sixth such consultation since the handbook was first published in mid 2001.
It is not the FSA's fault - indeed the process of consultation has been a feature of UK government for many years but the pace of document release, from a wide range of departments and agencies, has accelerated dramatically in the past couple of years. It now seems likely that there will be a significant growth in the number of firms offering to prepare submissions on behalf of industry sectors - and that can only lead to a USA style lobbying industry, one of the more distasteful sides of Washington politics, creaating, as it has, a culture of fear and favour.

There is little contentious in most of the new CP which largely deals with financial stability issues arising out of Basle II but some of the complaints procedure amendments may have a significant effect on investment firms of various types.

The new document, which can be downloaded from the FSA website deals with a range of issues including

- Amendments to the Conduct of Business sourcebook

- Amendments to the Supervision manual and the Interim Prudential sourcebook for Banks

- Amendments to the Dispute resolution: Complaints sourcebook

- Amendments to the Compensation sourcebook

The document says of its proposed amendments to the Conduct of Business Sourcebook "There is no effect on our financial crime or public awareness objectives" or "no significant effect."

The amendments range from the correction of typographical and / or grammatical errors to significant changes in the reporting of various financial statements and returns, including the making or certain reports on paper or, if electronically, in a form prescribed by the Bank of England. The consultation paper sets out a form for paper returns on large capital exposures, for example.

Of particular interest is the requirement for reporting of loans to companies with which senior bank staff are connected.

Another important issue is that the large exposure percentage will be modified - it will amend from "over 10%" to "eual or more than 10%" of its large exposures capital base.