"Better Regulation" refers to improving the quality of financial regulation in order to bring about a Better Regulatory environment. The FSA sees "better regulation" as an overarching theme for the institution's work in the coming years.
The first pillar of Better Regulation aims to ensure the effectiveness of financial regulation as a whole through the optimal combination of a "rules-based supervisory approach," which involves establishing detailed rules and applying them to individual cases, and a "principles-based supervisory approach," which is a framework in which several key principles are explicitly stated so as to encourage voluntary efforts by financial firms in line with such principles. The FSA agreed with the financial firms on 14 key principles that constitute the cornerstones of the principles-based supervisory approach.
We have been engaged in various efforts to achieve "Better Regulation," centering on the following major pillars:
Second Pillar: Timely recognition of priority issues and effective response
Third Pillar: Encouraging voluntary efforts by financial institutions and placing greater emphasis on providing incentives
Fourth pillar: Improving the transparency and predictability of regulatory actions
From the viewpoint of conducting regular reviews of the progress of its efforts toward “Better Regulation”, which will then serve as a reference for subsequent efforts, the FSA has decided to publish progress reports on Better Regulation on a regular basis.