The FSA says it could transfer responsibility for monitoring professional standards to individual firms - providing the industry can persuade the regulator of the merits of such hands-off regulation.
In its professionalism consultation paper CP10/14 out today, the regulator says the alternative approach would see firms monitor their advisers and notify the FSA in the event of rule breaches.
However, it says leaving firms to carry out such "robust analysis" is less likely to achieve its consumer protection objectives.
But it has indicated it will adopt the more laissez-faire approach to regulation if the industry makes a strong enough argument.
"We are open to feedback and, were we to be persuaded to adopt this alternative approach, we would consult on draft rules to do so through a shortened consultation period," it says.
It adds it would use a quarterly consultation paper to enable introduction of final rules by the end of 2010.
The self-regulation suggestion comes in a section of the paper whereby the FSA sets out proposals to monitor professional standards of advisers through data submitted from firms.
"This data, along with other insights, such as the results of outcome testing, will allow us to identify issues at an individual adviser level and, over time, to build a profile of individual advisers," it says.
But it says an alternative to establishing the IT systems to support this data-led approach is allowing firms to monitor their own advisers.
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