A recent survey by accountant Grant Thornton presents some worrying conclusions about brokers' preparedness for FSA regulation.
While the survey revealed that 96% of brokers surveyed were confident they would be fully prepared and on time to submit their application, other findings painted a bleaker picture.
The survey found that many brokers (53%) vastly underestimate the nature of FSA regulation, as compared to self-regulation under the GISC. But it is a misconception to believe that FSA regulation will be similar to the GISC and that life will return to normal. The FSA has teeth; corporate and personal risks will increase, and brokers must take stock of this.
Forty three per cent of respondents said that they did not comply with GISC requirements. The FSA would certainly not tolerate a similarly lax attitude to compliance, and brokers would be taking great risks in trading non-compliantly.
The survey found that nearly 40% of the top 50 brokers had not budgeted how much preparations would cost. Practical issues such as training staff and preparing the application were also challenging respondents.
I hope that over the coming months this column will help to demystify many of these issues and provide practical guidance on how to implement the rules. Keep writing in with your questions and suggestions for areas that you wish to be covered.