It’s nearly two years since we began our small firms assessment work. As most brokers fall within our definition of a small firm this is a good time to update you on how the programme is going.
In the past two years we have increased our direct contact with small firms by seeing what companies are doing on the ground and assessing whether they are treating their customers fairly.
Our main objective is to find and take action against firms that tarnish the reputation of the behaviour or stop them doing business.
Before we assess firms we hold a roadshow for them and other local companies to prepare them for what we will be looking at.
The assessment lasts around an hour and can take place either face-to-face or over the telephone. It covers how firms are meeting our six Treating Customers Fairly
consumer outcomes which include things such as whether advice is suitable and whether advisers are competent.
We have published examples of how these consumer outcomes can apply to different types of firm on our website. These can be found by following the small firms link on the FSA homepage.
If firms think they will see us for an initial assessment then not have to worry for a while, they are mistaken
After visits we sustain our level of engagement – for example, through workshops for firms that have already been assessed.
These happen 10 months down the line to ensure companies are still on target and help them with any issues they might have. All this ensures that no firm is ever below our radar.
If there are some companies that think they will see us for an initial assessment and then not have to worry about us for a while, they are mistaken.
When an assessment gives us cause for concern we follow up with a full-scale supervision visit, looking at all aspects of a firm’s compliance processes.
In most cases, we end up working with firms to get them to make necessary improvements but if we find that some companies are not meeting our standards and remain unwilling to change we get tough with them.
There are a range of measures we can take to change companies’ practices and protect consumers, with enforcement action such as a ban from the industry having to be used in some cases.
The objective of all this activity is increased consumer confidence and a level playing field for responsible firms.
So far, the reaction we have received from the industry has been broadly positive, with our independent survey of firms showing that most welcome increased engagement with the FSA.
DIRECTOR OF SMALL FIRMS
FINANCIAL SERVICES AUTHORITY