The FSA will place particular attention and investment on small firms, such as adviser and intermediary businesses, over the course of the next financial year.
Details of the FSA plan and Budget consultation says the city watchdog will continue with plans and priorities it set out last year, while also including new responsibilities for mortgages and general insurance.
That said, give 97% of the 25,000 FSA-regulated firms are now 'small firms' Callum McCarthy, FSA chairman, says: "With our new responsibilities for mortgage and general insurance brokers comes the responsibility for a further 14,000 firms, almost all of which are small firms.”
Interestingly, following its much-publicised tribunal with Legal & General, the FSA says it will also review its procedures for investigations and making enforcement decisions.
“Careful consideration will be given to the comments of the Financial Services & Markets Tribunal in its recent judgment on the case between the FSA and Legal & General,” the city watchdog says.
The regulator also outlines a total budget figure for the year of £266m, up by 6.5% from the previous year.
A further £5.9m will go towards developing mortgage and general insurance, an extra £4m is needed for its consumer education plans, £5m for the cost of mortgage and general insurance, £1m for a project to bring down the indirect costs imposed by the FSA and an increase to £6m of funsd into the FSA final salary scheme to cover a £43m deficit (down from £51m in 2003/04).
The FSA says it will increase its benefits towards small firms to "include the ability to build personal handbooks; capped fee increases during the year for the vast majority of small firms and considering a market solution to enable small firms to pay fees and levies by instalments,” it says.
The FSA will also continue its research on costs of regulation, in partnership with the Financial Services Practitioner Panel through a nwe working group, to place particular focus on the costs imposed on small firms.
Other areas of focus will include regulating practices in the primary debt markets, complete current work on hedge funds and, in the wholesale insurance market, the matter of conflicts of interest and transparency.
Retail enforcement should see the regulator keeping a close eye on senior management responsibility; mis-selling; complaints-handling; financial promotions; inadequate financial resources; and unauthorised activity by firms in the mortgage and general insurance markets.
The FSA says around 60% of regulated firms (principally small firms, paying minimum fees) will experience an increase in fees of no more than 2.5% as result of the increased budget.
Fines are expected to raise around £21m for the year towards the budget.IFAonline
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Retirement Planner Forum 2019