Mark Ehlinger, director at The Coaching Platform Ltd, said the costs for a small firm were substantial, as staff were forced to take time away from their job of advising to help the regulator during its visits. He said: “If the firm has 250 people working for it, the proportionate cost isn’t too great, but when the firm is small, the opportunity cost to the broker’s business is potentially very substantial.”
“It should not be necessary for a tiny firm to build processes and systems to accommodate the possibility of copious quantities of management information being demanded by the regulator. The small firm pays its regulatory fees each year.
However, being selected for a Thematic Project can add £10,000 or more to its operating costs. The lion’s share of the benefit accrues to the regulator, but the costs are borne by the regulated firm, which has no control over them,” he added.
Ehlinger stressed his disappointment by adding that the FSA did not seem to be adhering to its own ‘Treating Customers Fairly’ (TCF) rulings: “Arguably, the regulator has its own duty to treat customersfairly, but in this context, the customer is its regulated firm. It could consider whether landing its member firm with an additional £10,000 or £20,000 of costs, is inconsistent with the TCF ethos, which the regulator is keen to promote throughout the mortgage industry.”
Robin Gordon-Walker, spokesperson at the FSA, said the regulator had made recent efforts to make it easier to do business with, especially for small firms. “We understand that, for a small firm, time taken up on a thematic visit means time lost selling, but we are doing what we can to reduce the costs and burdens on small firms.”
