Corporate governance as a contraption of the FSA's accountability

Abstract

PurposeOwing to the tremendously vast and unprecedented nature of the directly‐conferred statutory powers of the Financial Services Authority (FSA) (under the Financial Services and Markets Act (FSMA) 2000), there is need for ample accountability on its part. The paper aims to discuss the situation.Design/methodology/approachA critical analysis of the Combined Code on corporate governance. The paper argues in favour of obliging the FSA to adopt the Code as a way of making it accountable.FindingsIt is desirable that the FSA be accountable and that this can best be done via the imposition of corporate governance principles. The paper includes a suggestion of election of the FSA's governing board.Practical implicationsThe wider re‐drafting (and construction), by Parliament, of section 7 is the most attractive mode of enforcing corporate governance as an accountability mechanism. This is so, as it will give it far greater force than at present by creating a mandatory regime to bind the FSA in this respect. What is required, therefore, is an amendment of s. 7 of the FSMA 2000 to establish a better accountability method to be imposed on the FSA.Originality/valueThe paper proposes, for the first time, the use of corporate governance (especially the Combined Code) to ensure the accountability of the FSA. The paper is valuable to academics, postgraduate research students and legal practitioners in the area of financial services regulation, corporate law and general public body accountability. It is also useful for those interested incorporate governance and the Combined Code on corporate governance.