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Climbing twin peaks

The FSA will be making the first of a series of major regulatory changes in the UK by switching to the new 'twin peaks' model from 2 April. The FSA will be replaced altogether by the Prudential Regulation Authority and the Financial Conduct Authority from early next year and the changeover in April is designed to ensure a seamless transition. From 2 April banks, building societies, insurers and major investment firms will be supervised by two separate bodies with one focusing on prudential issues and one focusing on conduct. The key characteristics of the new model:

•Two independent groups of supervisors for banks, building societies, insurers and major investment firms, covering prudential and conduct;
•Supervisors making their own, separate, set of regulatory judgements against different objectives;
•‘Independent but coordinated regulation’ designed to allow internal coordination between both conduct and prudential supervisors to maximise the exchange of information relevant to their individual  objectives, but with supervisors still acting separately when engaging with firms; and
•Retaining the principle of seeking to ensure that regulatory data is only collected once.

FSA CEO Hector Sants announced the move to the British Bankers’ Association on Monday as part of the wider regulatory shake-up that will "crystallise the change from the old-style reactive approach to the new-style proactive approach".