FSA Small Business Panel Annual Report Calls For Reduced Regulatory Burden

by Robin Pilgrim, LawAndTax-News.com, London

24 June 2004

Announcing the publication of its fifth annual report on Tuesday, the Small Business Practitioner Panel of the UK's Financial Services Authority praised the progress made in reducing the compliance burden for small firms within the financial services industry, but stressed that there is a long way still to go.

Introducing the annual report, the outgoing joint chairmen of the Panel, Michael Quirke and Roger Sanders explained that:

"We have put pressure on the FSA to ensure that they appreciate that a 'one size fits all' regulatory regime will have serious disadvantages - particularly for small firms and their customers. Whilst an industry dominated by large firms may well be easier to regulate, this would be an undesirable consequence for the marketplace as a whole."

Incoming Chairman, Ruthven Gemmell supported this assertion, observing that:

"There is no question that heavy or over-regulation typically constitutes a significant competitive advantage to larger firms. Most small firms do not have access to dedicated compliance resource and expertise - unlike their larger counterparts. Against this background, it is vital that the Panel and the FSA remain alert to ensure that small firms are listened to, supported and actively encouraged."

The new Panel chief went on to add:

"Even though we know that FSA management is committed to ensuring that small firms are accommodated within the regime and that they are not squeezed out purely by virtue of the pressures and burdens of regulation, there remains room for further improvement."

Issues of concern examined in the report include depolarisation, Sandler products, the regulation of mortgage advice and general insurance, capital adequacy standards, the Financial Ombudsman Service, the Professional Indemnity Insurance marketplace, and the FSA's Treating Customers Fairly and with-profits initiatives, as well as a number of more general and overarching issues of concern to smaller firms.

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