Why didn the FSA conduct an industry-wide review?
We have the power – under the Financial Services and Markets Act 2000 (FSMA), which sets our powers and responsibilities – to undertake an industry-wide review in response to a perceived risk. However, we are required to act proportionally and appropriately when applying our regulatory tools, and to ensure that the projected costs of any action do not outweigh the benefits. We decided not to undertake an industry-wide review of alleged endowment mis-selling, as we thought such a review would be needlessly expensive for firms and would deliver little additional benefit for consumers. The detailed reasoning for the decision can be found in chapter 4 of our progress report on mortgage endowments (October 2000). In line with our proportionate, risk-based approach, we have adopted a targeted supervision policy. As we explained in our 2006 progress report, since July 2005 we have required 52 of the largest firms in the mortgage endowment market to provide us with greater levels of detail on
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