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FSA sends out strong warning to small adviser firms

The FSA has fired a strong warning to small adviser firms that they are not beneath the regulatory radar and will not escape its attention.

Speaking at a conference in London, director of small firms and retail intermediaries sector leader Stephen Bland branded as “folklore” the mistaken belief of some that small firms can escape the regulator.

He said this misconception risked tarnishing the industry and that the FSA’s risk-based approach enabled it to supervise a large number of small firms effectively.

Bland said in particular he was concerned by commentary in some parts of the market that it is now more onerous to be monitored by a network than to be directly authorised by the FSA, which is driving advisers away from networks.

Bland said commentary that ARs are deserting networks to become directly authorised could not be backed up by the facts. He said in the first quarter of 2007 the number of ARs rose by 150.

The number of directly regulated advisers also rose by an average of 29 a month over the last year, but only a quarter had been network leavers. He said the rise was due to the “healthy growth” of the sector not a rush away from networks.

He said the slight decline in ARs. of 3 per cent in the last year, could be put down to the collapse of two large networks, people exiting the market and the increased competition to networks from service providers.

Bland said: “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.

“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”.


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