On the back of the research the FSA has called on small firms to act on the advice they are given by compliance consultants if it would help them comply with their regulatory requirements.
The regulator carried out work in late 2006 and early 2007 to see if, and how, compliance consultants were used and if they were used effectively.
It visited 22 firms employing consultants in early 2007 and found nearly half of them still had significant weaknesses in respect of their regulatory requirements.
The FSA says the work was not to assess compliance consultants.
FSA head of investment in the small firms division Jonathan Fischel says: “Firms need to meet their regulatory responsibilities, and respond to any compliance failures that have already been identified by their consultants. Firms should always take appropriate action to be compliant. They cannot contract out their regulatory responsibilities and they should not assume they are fully compliant just because they employ consultants.
“We have produced various tools to help small firms comply with our rules, most of which are available to them free of charge. We believe small firms can meet their regulatory responsibilities without the need to use compliance consultants, but we do recognise that small firms can benefit from the use of compliance consultants.”