Industry guidance to receive FSA seal of approval

A more principles-based approach to regulation would include formal recognition of industry guidance under proposals outlined in DP06/5. The FSA identifies three possible approaches to guidance issued by trade association and professional bodies: the ‘safe harbour’, which would require changes to the Handbook after consultation; secondly, a ‘sturdy breakwater’, which would need to be clearly stated and only bind the FSA; and ‘implicit recognition’, which has no legal bearing on the FSA or any other party. The regulator believes that the sturdy breakwater would in general be appropriate.