The U.K.'s Financial Services Authority (FSA) on Jan. 29 released its Financial Risk Outlook--a yearly look at industry developments that the agency sees as risks to its regulatory objectives. The 2008 outlook was significantly less rosy than last year's report, which spoke of "continued stability." The FSA noted that "financial market conditions deteriorated considerably in 2007 as investors reassessed risks in their portfolios," adding that "these conditions will persist, particularly if investor confidence in some markets and financial institutions remains low."
The study added, however, that firms "must not divert attention away from focusing on conduct-of-business requirements" and will need to "ensure they treat customers fairly, continue to tackle market abuse and other areas of financial crime, and address other conduct-of-business requirements." FSA head Callum McCarthy, who called the outlook "a prudent attempt to highlight the risks that could impact consumers and firms in a less benign economy," noted that "firms and consumers need to recognize there are both short- and long-term risks and should think about the implications." Excerpted here are sections of the report on asset management and capital markets.
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