The smaller businesses practitioner panel is calling on the FSA to investigate research suggesting that nearly one-fifth of firms are considering leaving the industry to escape the compliance burden.
The financial services practitioner panel’s survey into the FSA’s regulatory performance and effectiveness found that 17 per cent of IFA principals were considering leaving the industry due to the regulatory environment.
It also found that 86 per cent of firms and 92 per cent of advisers believe the regulatory system places too great a burden on firms.
Small business practitioner panel chairman Mark Rothery says the figures are “startling” and the FSA should conduct thematic work into regulation on small firms.
When asked to estimate the compliance costs as a proportion of total costs, over 10 per cent of smaller retail firms say the proportion is 25 per cent or more.
Rothery says the survey shows a worrying lack of clarity surrounding principle-based regulation, especially considering the regulator’s TCF adviser crackdown next year.
Fifty-seven per cent of smaller retail firms disagree that the FSA has made it clear how principle-based regulation will work in practice while only 36 per cent of smaller retail firms agree that the regulator has provided clear guidelines on how to implement TCF.
Rothery says he is pleased that 68 per cent of respondents say that the FSA’s small firms division has been a positive development, with only 10 per cent disagreeing.
Qualitative research found that the majority of practitioners suggest the FSA should focus on consumer protection, to the detriment of other objectives.
Sixty-four per cent of sma-ller retail firms said the level of regulation in the industry is detrimental to consumer interests.
Rothery says: “The figures for the compliance burden that respondents feel the FSA is placing on them are startling. The regulator needs to conduct some thematic work into this to find out the root cause of their dissatisfaction.”