The FSA launched a consultation paper on the subject back in April and it said the decision was made after positive feedback from the industry to that paper.
It is estimated the move will save companies £12.9m annually, with 3,200 small firms and 1,490 appointed representatives affected.
Stephen Bland, director of small firms at the FSA, said: “The FSA is committed to providing a level playing field for all regulated small firms which should promote competition and benefit consumers. We are challenging regulations whose costs outweigh the benefits they bring, and our work with the Department of Trade and Industry (DTI) to extend the audit exemption will bring firms that are limited companies in line with partnerships and sole traders.”
The changes are expected to come into force for financial years ending on or after 31 December, subject to the necessary changes being made by the DTI.
The FSA insisted the changes would not threaten customer protection as firms are already covered by six-monthly Retail Mediation Activities Return (RMAR) reporting.
However, firms that hold money for their clients will still be subjected to an audit, but only on that money.
Rob Griffiths, associate director for the Association of Mortgage Intermediaries (AMI), said: “This is something AMI and the Association of Independent Financial Advisers (AIFA) have been lobbying for for some time. Since the introduction of the RMAR, we have felt the cost and inconvenience of the audit have been disproportionate to the benefits for the FSA. This is good news for the sector and will provide good savings for brokers.”
