The FSA has introduced regulations that will compel IFAs to file regulatory returns electronically and provide detailed information about their firms on a six-monthly basis.
The regulator will use the information about firms' financial health and business activities to monitor compliance and identify trends in the sector.
IFAs are split over the introduction of the new requirements. Some complain that compiling all the information will be arduous but others say they have no problems with the new requirements as they have all the required information readily available.
The FSA says it is sympathetic to the extra burden this places on small firms and plans to give those with an income of £60,000 or less an extra six months to gear themselves up for half-yearly reporting.
It has also published final details of its mandatory e-reporting requirements. From April 2005, IFAs will have to submit their returns online or direct from their computer to the FSA's systems.
Trade bodies welcome the introduction of e-reporting although Aifa believes the requirement could be difficult for IFAs which do not have access to broadband internet services. Director general Paul Smee says: “I am not entirely convinced that the regulator is putting in place a system that will make use of all the information it is asking advisers to provide. I do not know how useful it will all prove.”
FSA director of high-street firms Sarah Wilson says: “We need to have a clear picture of what is happening in the marketplace to help us to spot potential problems early on and determine whether action needs to be taken. That is why we are asking firms to provide us with information on a regular basis.”