FSA Reveals Progress On Ensuring Regulated Firms Meet Minimum Standards

by Robin Pilgrim, LawAndTax-News.com, London

01 September 2005

The Financial Services Authority (FSA) revealed on Monday that its work over the past year to maintain standards among smaller financial firms saw more than 130 firms take corrective action to the way they operate to address serious failings and 28 firms lose or have their authorisation to do business changed.

The regulator's threshold conditions team (TCT) deals mainly with small regulated firms that are not meeting the FSA's minimum requirements (or "threshold conditions").

The TCT generally takes action when firms fail to co-operate with the FSA, although the first option is usually to work with firms to correct problems.

Clive Briault, Managing Director of the Retail Markets Business Unit, explained that:

"The financial system relies on FSA-regulated firms, whatever their size, having the resources to meet their obligations to customers."

He continued:

"We work with firms to help them keep to the required standards but we take action when we find serious problems that could result in consumers losing out."

According to the FSA, in the year to 30 June 2005:

• Approximately 63 firms addressed serious failings and breaches of the threshold conditions when presented by FSA supervisors with the prospect of a referral to the TCT;
• There were 69 other firms referred to the TCT who took corrective action to address serious failings when faced with imminent enforcement action;
• A further 30 firms had their permission to conduct regulated business cancelled or changed by the FSA for breaches of the threshold conditions, action taken in support of the FSA's consumer protection and market confidence objectives; and
• Three individuals were prohibited for not meeting the FSA's fit and proper requirements.

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