This section is a summary of SUP 1.
- (1) 2
securing the appropriate degree of protection for consumers; and
reducing the extent to which it is possible for a business to be used for a purpose connected with financial crime.
In designing its approach to supervision, the FSA has had regard to the principles of good regulation set out in section 2(3) of the Act. In particular, the FSA's regulatory approach aims to focus and reinforce the responsibility of the management of each credit union to ensure that it takes reasonable care to organise and control the affairs of the credit union responsibly and effectively, and develops and maintains adequate risk management systems. It is the responsibility of management to ensure that the credit union acts in compliance with its regulatory requirements. The FSA will have regard to the principle that a burden or restriction should be proportionate to the benefits which are expected to result from it.
The purpose of taking a risk-based approach to supervision is to focus the FSA's resources on the mitigation of risks to its regulatory objectives, and to have regard to the need to use the FSA's resources in the most efficient and economic way. The approach to risk assessment of credit unions is based on both the impact of such risks were they to crystallise and the probability of their doing so.
The FSA classifies these tools under four headings:
diagnostic: designed to identify, assess and measure risks;
monitoring: to track the development of identified risks, wherever these arise;
preventative: to limit or reduce identified risks and so prevent them crystallising or increasing; and
remedial: to respond to risks when they have crystallised.
liaison with other agencies or regulators;
meetings with management and other representatives of a credit union;
reviews and analysis of periodic returns and notifications;
reviews of past business;
use of auditors;
use of skilled persons.