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FSA to announce cuts in adviser firm supervision

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The FSA plans to cut back the number of staff dedicated to individual adviser firms and deploy more “floating” supervisors to address thematic industry-wide issues.

The regulator will publish a document later this month outlining the Financial Conduct Authority’s approach to financial services regulation.

The paper will detail plans to reduce the regulator’s focus on individual firms in favour of greater scrutiny of products and industry issues.

A source says: “In the new world the supervisors will be divided between those who are firm-specific and ‘floating’ supervisors who can be deployed on different issues as they come up on a thematic basis.

“It is more flexible and should lead to quicker responses.”

An FSA spokesman says: “We have always been quite clear that, ultimately, some firms will no longer have a dedicated supervisor, but we have not yet finalised the numbers.

“This approach will allow us to have more supervisors who can be deployed flexibly to deal with problems that arise and specific issues or products that have the potential to cause consumer harm or are already doing so.”

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. This sounds like good news but elsewhere I read that this is coupled to a likely increase in requests for S166 reports at the IFA’s expense.

    S166 should be illegal as it flies in the face of justice.

  2. @ Soren

    I share your sentiments. Sadly, as proven by the FSA’s flagrant abuse of its powers in the Arch cru debacle, the FSA has scant regard to justice or equity when it comes to dealing with “pesky advisers”.

  3. Soren – interesting, I agree its a supervision tool that must be deployed for the right reasons but I’m interested to hear why you think it should be illegal?

    Have you been on the receiving end of one?

  4. inevitable. less advisers need less supervison.

  5. Nicobobinus – not personally, but one firm I’ve had a business relationship did get one. It was a one man band who was basically put out of business by it.

    Was he a crook? No, he was a regular IFA who wasn’t great at paperwork.

    Did they find anything? Nothing other than minor administration failings. No advice problems other than the use of Arch Cru in some portfolios.

    This was a small, long standing, IFA firm run by a man who, in my opinion, aimed to do a decent job for his clients.

    Once the FSA had the report no fine was issued and no formal notice. However it cost the IFA around £25K to prove his innocence and the time involved put him out of business.

    S166 is like the police turning up on your doorstep and accusing you of murder. They then ask you to pay for their investigation.

    If the FSA is going to use this weapon then they must foot the bill if no evidence of wrongdoing is found. Otherwise we may as well all close now.

  6. @ Soren

    Same happened to me,

    The trouble is if these FSA staff dont understand your business or the client files they reach stright for the back pocket and pull out a 166.

    I bet the vast majority are not quallified or will not be level 4 moving forward.

    Very expensive mistake to let these vile toads in the door without some kind of legal or compliance expert to sit in.

  7. It appears that in future we need to “lawyer up” if we get this type of supervision.

    Anyone know of a legal expenses insurance scheme which will cover such abuse by the regulators?

    Please advise us all where we can get cover.

  8. @ Ned

    I dont think you can cover this ? as far as I am aware you even need the FSA’s permission to show the case files to any 3rd party (unless it is of course the firm doing the skilled persons report) so in short they have a very firm grip on your ? well lets just say your gentlemen bits.

    “be afraid” or “shoot first” ring any bells ?

  9. Ned and DH

    DH your right, the FSA handbook sets out that a firm may not insure against regulatory censure. Makes sense if you think about it, there would be little incentive to ‘behave’ if you felt a sense of security from the insurance policy in your back pocket.

  10. You can bet your boots that “firm specific” supervisors will remain allocated to the networks, thereby enabling the FSA’s established practice of regulation by proxy to continue.

    I always remember Simon Hill of Interdependence expressing his weary disgust with the way in which the newtwork’s yearly visit was characterised by the man from the PIA presenting them with one hand a bill for that year’s levies and with the other the latest dossier of things they were expected to do over the coming year.

  11. You can bet your boots that “firm specific” supervisors will remain allocated to the networks, thereby enabling the FSA’s established practice of regulation by proxy to continue.

    I remember Simon Hill of Interdependence expressing his weary disgust with the way in which the newtwork’s yearly visit was characterised by the man from the PIA presenting them with one hand a bill for that year’s levies and with the other the latest dossier of things they were expected to do over the coming year. No wonder he retired not long after.

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