The Panel, which questioned 4,459 regulated firms, found that the number of advisers rating the FSA poorly for maintaining confidence in the UK financial system shot up from 15 per cent in 2006 to 38 per cent this year.
Sixty-one per cent of firms say the FSA has focused on consumer protection to the detriment of other objectives and only 58 per cent say the FSA is alert to emerging EU issues.
Only 11 per cent of firms rated the FSA highly in terms of offering value for money.
Despite this 85 per cent of advisers surveyed recognise the need for strong regulation. This is up 6 per cent from 79 per cent in 2006.
Firms showed strong support for the treating customers fairly initiative with 89 per cent reportedly in support of it, but only 53 per cent say the regulator provided a clear explanation of how to implement TCF.
The survey shows general support for more principles based regulation, with 75 per cent agreeing that it is a welcome approach. But only 29 per cent believe the FSA made clear how more principles based regulation will work in practice.
In addition, 62 per cent feel that MPBR may leave them open to retrospective regulation.
Financial Services Practitioner Panel chairman Nick Prettejohn says: “This survey gives a useful readout of the attitudes of the industry to regulation taken around the middle of 2008. Not surprisingly, there was a sharp decline in the rating given by the industry in the rating of the FSA for maintaining confidence in the financial system, although there was no change in firms’ rating of the FSA’s performance versus its other objectives.”
FSA chief executive Hector Sants says: “The FSA recognises that our understanding of firms and their business remains the major area where we need to improve, and this has been identified as a priority for some time. We are taking significant steps to move forward with this and there are already some signs of improvement here.
“General concern among firms about the stability of the financial system has come through more prominently in the survey results than worries about increased regulation or the cost of regulation, both of which seem to have receded in relative importance.”