UK says regulation volume creates challenges

LONDON – UK regulators warned on January 25 that the volume of regulatory reform continues to create challenges with one important issue being the need to achieve a reasonable co-ordination of “the levels of engagement of home and host country supervisors”.

The UK Financial Services Authority (FSA) says in its financial risk outlook for 2006 that it remains particularly concerned about the challenges facing many firms through to 2008 that arise from the need to comply with new EU laws, including the Capital Requirements Directive (CRD). The CRD, the EU version of the Basel II bank capital rules, will apply to all EU banks and investment firms from the beginning of next year.

The FSA says firms need to devote adequate resources, including senior management time, to address the implementation issues and manage their compliance risk.

“Firms that underestimate this challenge are likely to incur significant last-minute costs and/or additional compliance risk,” the FSA says.

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