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FSA could be reformed to reduce regulatory burden

The Financial Services Authority could be reformed to reduce the regulatory burden on small businesses, under plans revealed in the chancellor’s pre-Budget statement last Thursday.

Chancellor Gordon Brown pledged to ease the regulatory burden on small businesses – which would benefit IFAs and brokers – following Hampton Report recommendations.

Philip Hampton, a former finance director at Lloyds TSB and chairman of supermarket chain J Sainsbury, has spent the past eight months consulting with 200 businesses to compile his report on how the 59 national regulators and 468 local authorities enforce regulation.

His interim report, Reducing administrative burdens: effective inspection and enforcement, published last week finds room for improvement. It says compliance is too focussed on inspection rather than advice and states regulation is applied inconsistently with a disproportionate amount of paperwork piling up on small firms.

Hampton’s solution is more and better tailored advice, fewer and more simplified forms for business and the potential for reform of the regulators.

Hampton says: “I was concerned by the complexity and inconsistencies in the inspection and enforcement system, and the different interactions that a typical business has with its regulators.

“Our consultation is an opportunity for businesses, regulators and consumers to have their say on our ideas, and I would encourage all stakeholders to contribute.”
Brown says: “Britain has to take tough decisions to achieve American levels of business creation.”

The FSA claims it is doing what it can to slim down bureaucracy and the cost of regulation.
Callum McCarthy, chairman of the FSA, says: “A key question for us is what can we do to reduce the FSA’s contribution to the cost of regulation? One of our priorities for the coming year will be to examine the impact of our regulation on this sector and look for opportunities to reduce the burden where the impact of regulation is disproportionate.”

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