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Firms criticise Arrow advice

Over two-thirds of firms vis- ited by the FSA’s Arrow risk assessment visits have slammed the regulator for failing to provide them with ade- quate guidance on reducing business risk.

Sixty-nine per cent of firms visited by the FSA’s risk assessment framework (Arrow), teams are frustrated by the regulator’s failure to give guidance on how they could lower their risk assessment rating. Forty-one per cent of firms are frustrated that guidance was not given by the FSA on prioritising actions required to improve their performance and service to customers.

But the regulator does score highly in some areas, with 85 per cent saying they received sufficient notice before the visit,and 67 per cent considering the issues raised in the FSA’s risk mitigation programme drawn up after the visit to be accurate.

A total of 136 firms from all parts of the financial services industry took part in the survey which was conducted by lawyers Beachcroft Wansbroughs. Arrow visits assess the risk that firms pose to the protection of the consumer, the promotion of understanding and main- tenance of confidence in the financial system.

Beachcroft Wansbroughs head of financial services Nigel Frudd says: “The FSA needs to address these issues if it is to be respected by those it regulates and be fully effective in achieving its stated aims. Additional tensions between the financial serv- ices industry and the FS are arising due to the framework of principle-based regulation. One downside with the partnership approach is that it would remove a degree of certainty for firms and for the FSA and this could lead to further issues.”

But Innes Reid Investments senior adviser Jim Turner says: “The rulebook should tell these firms what they need to know. I think that some firms expect to have their hands held.”


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