FSA to step up action on small firms

The Financial Services Authority says its supervision of small firms in the future is going to involve more “intensive individual firm interventions” as it focusses on a more intrusive style of regulation.

Jon Pain
Jon Pain, managing director of supervision at the FSA

In a speech to the City and Financial Intensive Supervision Conference today Jon Pain, managing director of supervision at the FSA, says under the regulator’s intensive style of regulation large firms will be subject to more mystery shopping and consumer research, while smaller firms will continue to be supervised through regional roadshows, firm visits and follow-up workshops, which he says have generally received positive feedback.

Pain says: “In addition, as a result of risk alerts and thematic work, we will make more intensive individual firm interventions. The recent banning of 80 mortgage advisers for fraud with fines of over £1m was one such intervention.”

Speaking about the FSA’s regulatory approach overall Pain says: “This intensive approach is not just a battle hungry FSA looking for confrontation for its own sake.

“Our message to firms is clear – where necessary we will intervene and we will not be pressurised to back off.

“Firms will be well advised to engage with us in a proactive and open-minded manner rather than believe they can bulldoze the regulator at the last minute.”

As part of its more intensive regulatory approach the FSA has also given greater emphasis to the role of senior management.

Since October 2008 Pain says this approach has led to over 400 interviews and the removal of more than 30 individuals from senior management posts.

He adds: “Firms need to take note that this is not just a box-ticking exercise.”