FSA Warns Small Firms Against Complacency

by Robin Pilgrim, LawAndTax-News.com, London

24 May 2007

The UK's Financial Services Authority (FSA) on Tuesday sought to dismiss the 'folklore' that small retail firms are under the regulatory radar.

Speaking earlier this week at a conference for financial advisers, the Financial Adviser Expo, Stephen Bland, the FSA's Director of Small Firms, warned that a misconception that small retail firms could escape the FSA's attention was wrong, and risked tarnishing the industry.

He argued that the FSA's risk-based approach to regulation enables it to supervise a large number of small firms effectively, and assists the regulator to take appropriate action against firms who pose a significant risk to consumers.

Mr Bland explained that:

"We are sending a very clear message that small retail firms are not under the radar. Our regulatory approach is based on giving help to firms who run their businesses while Treating Customers Fairly and endeavouring to do the right thing - but coming down hard on those who don't."

He continued:

"Our focus is on changing firms' behaviour to benefit consumers. We identify and prioritise risks, take action to mitigate those risks by taking specific action against individual firms. We also conduct industry-wide sampling exercises to look at specific issues which enables us to communicate the results to benefit the market as a whole. Firms that are not trying to comply with our requirements should be aware that they could be visited at any time."

The FSA uses regulatory returns, information from other sources and the results of firm-specific, supervisory and thematic work to maintain an accurate and up-to-date picture of small retail firms, and this allows it to target resources most efficiently.

Recommended