Small financial firms are in danger of being swallowed by their larger competitors as a result of th...
Small financial firms are in danger of being swallowed by their larger competitors as a result of the Financial Services Authority increasing regulatory power due to come into effect later this year, says its Small Business Practitioner Panel.
The concerns of the panel make up part of its second annual report to the board of the FSA on the overall effect of regulation on small firms.
Joint panel chairman Michael Quicke said: "The panel remains concerned that the FSAs new regulatory regime will place undue burdens on small firms. The impact of this may ultimately lead to lesser consumer choice if a proportion of small firms merge or cease to exist as a result."
Colleague and fellow joint panel chairman Roger Sanders added: "We will have a key role over the coming months in reviewing the impact of FSA policies as the FSA begins to put them into effect when it gets its full powers later this year. The panel will be ensuring that the views of the small firms it represents are not overlooked in the process."
While recognising the responsiveness of the FSA in presenting policy and feedback the panel nonetheless asked the regulator to allow for reasonable flexibility in particular with regard to its rule-making so that smaller firms are not disadvantaged. It also asked that the impact of increased costs and the introduction of regulatory codes such as the voluntary mortgage and banking codes be considered.
FSA chairman Howard Davies said: "We not the concern of the panel and the FSA needs to take account of the particular circumstances of small businesses. We believe our new risk-based approach to regulation will be better adapted to small firms than was possible under the previous regulatory regimes we are replacing. We will continue to pay close attention to the panel's views on how far we succeed."
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