"Firm but fair" are the proposals mooted by the FSA in its document, The Financial Conduct Authority: Approach to Regulation, which stresses the revamped City watchdog, the FCA, will be an organisation that “says what it wants and what it means, clearly and succinctly” and that it will be more transparent than its predecessor.

Commenting on FSA chief, Hector Sants' declarations, Sue Berwick, a senior compliance analyst, UK for Wolters Kluwer Financial Services, said: "The paper itself says that the FCA will aspire to “command the respect of consumers and of the firms it regulates”... interesting that firms are second on the list. This would appear to indicate a view that firms will have to respect the FCA, whether they support it or not, and that the FCA does not “belong” to them, but rather to the consumers it is intended to protect.

"The paper emphasises that the FCA’s regulatory approach will not be 'one size fits all', but that it will recognise the differences between firms and industry sectors in order to ensure the best outcomes for consumers."

The FCA will take a more proactive and outcome-focused style of supervision. There is also an implication that enforcement action will increase under the new regime, following the FSA’s lead over the last four years. Firms which are the subject of enforcement action are likely to be publicly named earlier in the enforcement process, which may act as a deterrent.

"While the overall message of the paper appears to be that the FCA will be 'firm but fair' in overseeing its constituency of firms, there is also a definite undercurrent of “no more Mr Nice Guy”, with the future authority getting ready to get tougher on the financial services industry," she added.

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