FSA Announces March Launch Date For New Small Firm Strategy

by Robin Pilgrim, LawAndTax-News.com, London

25 January 2008

The UK Financial Services Authority (FSA) has announced that its enhanced strategy for small firms throughout the UK will kick off in Northern Ireland in March, with the first of a rolling programme of assessments that will cover 11,300 retail intermediaries in the next three years.

The new measures were first announced last autumn by Hector Sants, FSA Chief Executive, and will test the progress being made by financial advisers, mortgage intermediaries and general insurance brokers, towards Treating Customers Fairly (TCF).

A progress report last year found that only 41% of small firms were meeting the TCF deadlines.

Designed to increase supervision of and contact with small firms, the strategy combines support for intermediaries embracing TCF outcomes with a tough approach for those who are not.

According to the FSA, it will see a new style of regional roadshow, closely followed by structured visits or telephone interviews in the same area.

The FSA plans to assess 3,000 small firms this year, stepping up to 4,000 a year from 2009. Each year these will be followed up with full visits to around a quarter of those firms which raised most concern during assessment.

Stephen Bland, Director of Small Firms at the FSA, explained that:

"TCF is an existing regulatory priority, but the deadline for firms to prove to us, and to themselves, that they are consistently treating their customers fairly is fast approaching - December 2008."

"It is imperative that firms engage with TCF and drive up standards. The new style roadshows together with the assessments will help accelerate this process. The measures will have an additional cost to intermediaries, but this should be outweighed by their positive effect on both consumer protection and confidence in the financial services industry.”

Mark Rothery, Chairman of the Smaller Businesses Practitioner Panel, added that:

"We wholeheartedly welcome the FSA's package of measures. Whilst these efforts will not come without some additional cost, this is far from being a false economy - in fact, the Panel sees it as something of a win/win proposition. This strategy will incentivise those smaller firms motivated to comply; and act as a meaningful deterrent to the laggards that either seek to do otherwise or who try to fly under the FSA's radar."

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