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FSA to carry out less supervision of lower risk small firms

FSA chief executive Hector Sants says the regulator will spend less time on the routine supervision of smaller firms to concentrate on the transition to the new regulatory structure.

Speaking this morning at the Thomson Reuters offices in Canary Wharf, Sants (pictured) said because the FSA has to both design the new regulatory approach and manage the transition, the regulator’s resources are “undoubtedly stretched”.

He said as the majority of staff’s time is spent on frontline supervision, the regulator needed to reprioritise its efforts to oversee what is a complicated transition process.

Sants said: “We will thus be taking a bottom-up and risk-based approach to scaling back some of our supervisory activities. Nevertheless, although this will be a risk-based approach, we will inevitably be decreasing the amount of time spent on pre-emptive, routine supervision for lower impact firms.”

He added although new risks may be created in the long-term, the move to the Prudential Regulation Authority and the Consumer Protection and Markets Authority meant that change to the regulator’s approach was inevitable.

He said: “There will be some modest diminution in respect of our on the ground inspection of smaller, low impact firms. Inevitably that potentially has an impact in the future on the emergence of new risks in the system. But I think we are trying to do it in as proportionate way as possible.

“We have a high amount of staff, and the reorganisation is a major challenge which clearly needs to be delivered on time in as cost effective a way as possible. Some modest alteration of our risk profile is an inevitable consequence of that programme.”


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There are 25 comments at the moment, we would love to hear your opinion too.

  1. After the horse has bolted comes to mind!!!!

  2. So the FSA has to “design the new regulatory approach”. So this new regulatory body is going to be different how?

  3. so, spending less time on the comapnies that write 50% of business and only have 2% of the complaints so they can spend more time on the bigger picture……..

    ……….Oh! why had we ifas not suggested this years ago….???!!!!!!

  4. We can see that they are not regulating high risk firms like keydata, they did not regulate the banks and now they are not regulating small firms either.

    This merely confirms what many have long suspected – they are doing precisly nothing – merely re-arranging the deck chaires on the Titanic!

  5. Was the FSA not declared ‘Brown Bread’ by the Government and have many of the good old’s not already jumped ship?

    Therefore please, tell Mr Sants in order that he does not loss his place in the jumping line.

    Optimism, Optimism, where is my optimism

  6. They’ve spent all our money on Christmas parties instead (M Marketing 9th dec says £1.25m spent on such). Nothing left to do their job…………

  7. Neil F Liversidge 13th December 2010 at 11:49 am

    If you are re-prioritising Hector, can I suggest that you please put an immediate end to the ritual dance of reauthorisation when an adviser leaves one firm to join another? There is no logical reason to assume an adviser’s competence needs to be re-proven just because he or she moves jobs. Bin this pointless paperchase and you can reassign staff to more useful tasks as well as enabling advisers to do what they are supposed to do without interruption, i.e. look after their clients.

  8. Should be a lot easier for the FSA now, due to thier actions in recent years there are a lot fewer smaller firms to regulate, mine will be one of them, I am sure that when hector wakes up and smells his coffee he will realise he has playes a huge part in ending Financial Advise for the masses, perhaps another part of thier plan?

  9. Michael Wainwright 13th December 2010 at 11:53 am

    Very sensible of Sants. Why spend money on the firms you are about to put out of business?

    The transition will be very complicated after all the name has to be changed on everything.

  10. But your costs will continue to increase !

    Compensation costs will also increase as they fail to regulate with a flawed system !

    The cost of advice to consumers will also increase !

    15% of experienced advisors are expected to leave the industry !

    All this is the great “achievement” of the FSA.

    Congratulations all round then and may they all have a great Christmas Party on us to celebrate !

  11. Incompetent Regulators Awards Team 13th December 2010 at 11:59 am

    IFAs don’t need any regulations and should be left out of the FSA loope altogether. Just a small registration fee of about £100 per firm is all that’s required.

    Regulations should be centred around where the problem is e.g. banks and product providers. Not distributors.

  12. I think the FSA are really starting to get to grips with the financial markets and they need to be strong to focus their efforts on consumer protection and protection of our financial markets.The banks and the complex derivative markets are the most risky, and rightly require the most energy.In addition IFAsshould recieve good financial assistance to help them reach the required qualifications. IFAS get studying its the only way.My personal dealings with the FSA have always been positive and they have been proffessional and helpful.

  13. Incompetent Regulators Awards Team | 13 Dec 2010 11:59 am

    I hope you are kidding!

    Does that mean that it will be the responsibility of the provider to ensure that clients are being advised correctly?

    There are sadly many advisers out there who do need to be closely supervised / reglated.

  14. I apologise to all in advance!

    But the phrase “No S**t Sherlock!!!” comes to mind

  15. More hot air from another FSA failure.

  16. Incompetent Regulators Awards Team 13th December 2010 at 2:08 pm

    To pension man.

    No not kidding as so called mis-selling is virtually non existent in teh IFA sector whilst the courts could do a much better than the Ambulanve Chasing Ombudsman who knows little about the real world.

    Leave it to the courts for disputes as they have a better idea how to handle these cases.

  17. The numbers of small IFA’s over the last 13 years has halved whilst the regulator (untill very recently) has been growing and spending almost £1/2 a Billion of our hard earned cash!

  18. True, there will be less supervision of small firms after RDR, many small firms will be gone and called it a day. They will no longer need supervision.

    If 20% go the FSA will still need to find the 20% in lost fees to continue to feed their empire.Get ready for huge increases.We will all have to pay.

  19. Incompetent Regulators Awards Team | 13 Dec 2010 2:08 pm

    I am afraid I do not agree. There are a lot of “bad apples” out there who do need to be monitored and regulated. I know – I deal with them. Mis-selling does happen in the IFA sector, although to a much lesser extent to the mis-selling done by banks.

    Courts are not the answer. What is needed is a fair, balanced and just regulator that defends the rights of consumers, as well as those of the advisers.

    Hopefully we will get this one day!

  20. I am a bit baffled by what some IFA’s want from a regulator. It seems that Mr Sants has finally said something progressive and positive and he is still being crucified. Please try to break the habit of FSA bashing and focus on the core points being made. I understand there is huge resentment and rightly so but to progress, serious considerations need to take place and spitting venom for the sake of it is simply counter productive. Past failings of providers, brokers and the regulators will be best avoided by making necessary change and at least the right noises are now beginning to be made. I would like to see individual accountability take place far sooner so I can stop paying for the greed and negligence of others in our industry. This process should lead to improvements which highlight the greatest dangers to our industry from larger firms, so support common sense and save the slating to the daft ideas that deserve it, I am sure there will be plenty to follow.

  21. Maybe I’m an old cynic, but is this Hector posturing in the light of the bashing the FSA had in the Parliamentary RDR debate?

    After the e-mail he reputedly sent to staff on election day (asking them when they vote to remember who wants to kill the FSA) I’m surprised he still has a job. The new Government could have sacked him for conduct unbecoming a public servant; i.e. misconduct.

  22. They keep going round and round in circles.

    It is not difficult, all they need do is get outside firms to tender to audit self regulated firms once per year, this cost needs adding to those small firms which remain self regulated, this way they are checked annually, other firms which are not self regulated are checked numerous times per year.

    The possibility of an IFA ‘scheme’ needs looking at, those which remain self regulated can join the scheme and the scheme regulates their members not the FSA, the FSA checks the scheme to make sure they are regulating properly.

    Then concentrate the FSA’s forces on the source of consumer complaints without massive publicity just get on with it.

    It is a move in the right direction, but these are words again from the FSA and we all have heard so much hot air and only action against very little people, that it is understandable that IFAs write the way they do, only when the FSA faces job losses and the loss of their own incomes do they make nosises as if they may do the right thing.

  23. FSA “Reoganisation”!!!!!!!!!!!!!!!!!!!!!!!!!!!!
    How many FSA staff does it take to change the name plate on the door?

    My prediction is 40% of advisers (tied & independent) will leave the industry due to over-regulation & exams failures/non takes.

  24. Incompetent Regulators Awards Team 14th December 2010 at 9:29 am

    To Pension Man

    What do you mean by many bad apples?

    60% of business written by IFAs 59% bank complaints with over 50% upheld with IFAs sector 2% complaints with 39% upheld -FOS figures.

    If you call that a lot you are working a very niche market. You don’t need an army of unqualified 4000 plus staff regulating such a small problem. You will never iliminate crooks in any sector of the market.

    I suspect you are either in compliance or in legal work, hence you need to protect your own small business. I understand your viewpoint but in the bigger picture, it’s an insignificant problem.

  25. What a load of self interested rubbish most of these comments are……

    Pension man is absolutely right. We are not talking risk to ‘the economy’ or ‘UK PLC’ we are talking about risk to individuals.

    When was the last time you heard about an investment bank defrauding, stealing, depriving or simply frittering away through incompetent advice somebody’s life savings?

    Its these individuals who need protecting first and foremost by the FSA as obtaining redress from a fly-by-night unprofessional individual IFA who just declares himself bankrupt is a lot harder than taking an issue up with a bank.

    And whoever said IFA’s shouldnt be regulated……what colour is the sky in your world!? If that happened any client with an ounce of brain would want ringfenced collateral against the possibility of the IFA costing them money. Do you want a charge against your house every time you take on a new client?

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