The UK Financial Services Authority has said that it is introducing new measures to increase its contact with small firms. The aim is to help firms make faster progress in meeting the regulator's 'treating customers fairly' initiative and to identify firms most in need of regulatory attention.
Building on its current risk-based approach, the Financial Services Authority (FSA) is introducing an ongoing program of structured visits and/or telephone assessments to test the quality of management and progress towards embedding the ‘treating customers fairly’ (TCF) principle.
The results will help inform its risk profile of individual firms so that it can better target resources at the firms that pose the biggest risk to its objectives. The FSA expects to carry out full on-site visits to approximately a quarter of firms to verify the assessments and follow up identified issues.
The FSA revealed that 90% of the firms it regulates are small. It uses data supplied by firms and other sources to give an overview of each small firm and to spot industry trends, in particular to identify issues that might pose risks to consumers. It also uses firm visits and telephone assessments to supervise individual firms or as part of FSA thematic work, and to inform its firm education and communication tools.
The FSA has already set a deadline of the end of December 2008, by which time it expects all firms to be able to demonstrate that they are treating their customers fairly. The programme of assessments will extend beyond this deadline to inform its ongoing supervision strategy.
Hector Sants, CEO of the FSA, said: We want to help small firms better assist their customers, many of whom are seeking advice on some of the biggest financial commitments they will ever make. Firms’ management must ensure that the FSA’s TCF initiative runs through every aspect of their businesses. Small firms are making progress on TCF, but we would like to help them accelerate the process. We are therefore increasing the contact we have with small firms to improve the rate of this change and to enable them to better help their customers.