FSA issues guidance on Basel 2 work

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FSA issues guidance on Basel 2 work

Nick Huber
The Financial Services Authority has published guidance for banks on one of the biggest compliance projects for IT departments, the forthcoming Basel 2 code on risk management.

The consultation paper, published last week, outlines the UK implementation of the Capital Requirements Directive, which will introduce the requirements of the Basel 2 code on risk management.

Basel 2, due to come into force in 2007, requires firms to better assess and manage the risks they face. It will necessitate wide-ranging changes to IT systems across subsidiaries worldwide.

The paper refers to a 2004 FSA survey in which financial firms said they needed more work in areas including IT systems and "database integrity" to comply with Basel 2 rules.

A second consultation paper later this year will outline the costs and benefits banks face in compliance with Basel 2.

www.fsa.gov.uk/pubs/cp/05_03

Bank invests heavily in compliance >>

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