The Panel has released its Annual Report for 2006/7. As a part of the regulatory accountability framework, the Panel represents the interests and views of smaller financial services firms (around 93% of the firms regulated by the FSA), and monitors the overall performance and effectiveness of the FSA in the context of its treatment of smaller firms.
Mark Rothery, chairman of the Panel, said: "2007 is proving to be another watershed year for regulation – the implementation of European directives, the FSA's transition to a more principles-based regime and the Retail Distribution Review – to name a few.
"It will be essential for smaller firms to actively engage with the FSA in order to continue to fulfil their regulatory obligations and to maintain contact with the changing regulatory environment.
"By way of example, rather disappointingly only 41% of smaller firms met the deadline for implementing the FSA's Treating Customers Fairly initiative. This does not mean that smaller firms are treating their customers unfairly. But it does suggest that smaller firms lack the information and motivation needed to drive forward the development of TCF processes within their firms.
"In the first instance, it is about the FSA ensuring that communications are clearer, better targeted and more accessible for smaller firms. Some recent progress has been made here, thanks in large part to the efforts of the Small Firms Division (SFD), of which the Panel has nothing but praise.
"The panel is eager to work with the FSA and see it maintain the momentum emanating from the SFD.
"In this respect the Panel strongly feels that the FSA needs to look carefully at its means of supervising smaller firms and would like to see a reallocation of resources in order to facilitate greater personal contact and interaction with smaller firms. This would help provide greater qualitative support for and collaboration with smaller firms, as well as helping to improve their general levels of compliance with a resultant boost in consumer confidence.
"The Panel believes that if the FSA is able to continue to raise its game in respect of communication with, and support for, smaller firms, then smaller firms will follow suit and more consistently meet the FSA's expectations of them."
