This paper considers the need for a more pro active approach which facilitates greater on site work
being carried out by supervisors – as highlighted in the Legal and General Case. It also considers the
recommendations made to the UK’s regulator - the FSA, and in particular to the FSA Board,
following the Legal and General Case. The recommendations are compared to the Basel Committee’s
Core Principles for Effective Banking Supervision. In drawing a comparison, the importance of
independent verification of work carried out by external auditors, be it through on-site examinations
or the use of external experts, is once again emphasised. The involvement of external auditors or other
experts in the supervisory process should not relieve a regulator from on site supervisory
responsibilities. As vital as an external auditor’s work is, it is also important to verify such work
