Regulator begins crackdown following "worrying" levels of non-compliance
The FSA is to commence its "large scale" review of the handling of client money by brokers next month.
The review will see more than 200 wholesale and retail firms targeted across the UK, following concerns over "worrying" levels of non-compliance with the client money rules by brokers.
The FSA wants to see a "significant improvement" in how firms are complying with client money rules and is threatening enforcement actions against those that are not compliant.
Andrew Honey, head of insurance firms in the FSA's small firms division, told Insurance Times: "The review will start in September and complete in December, with result published in the first quarter of 2007."
Honey said the review would be looking at firms across a range of industry sectors, and will include secondary intermediaries. Retail mediation activities returns (RMAR) will be used. "We will publish in advance the areas we will be targeting," he said.
FSA defends non-executive letters
The FSA has insisted that it does not keep correspondence from its non-executive directors after the IIB accused it of failing to pass on letters from the trade association.
This week, IIB director general Andrew Paddick attacked the FSA for its "flagrant disregard" of the non-executive director position.
He had been told that a letter relating to the Financial Services Compensation Scheme (FSCS) funding review would not be passed to the FSA's non-executive directors.
Paddick said: "It is often simply not good enough for a non-executive director just to rely on the FSA's executive's and staff's version of the facts, which can easily be written to support the secretariat's own opinions."
But the FSA said Paddick's claims were "inaccurate". It insisted that information was not held "held back".
"We do pass letters on to non-executive directors. They are sent through a filtering system collectively at the appropriate time, not as and when they come in from outside," a spokesman said.
Another market source said Paddick's claims were "a storm in a teacup" as trade associations could write directly to the non-executive directors.