FSA principles rules confuse small firms

The FSA is causing widespread confusion among small to mid-sized brokers over its principles-based initiatives such as Treating Customers Fairly, according to the FSA's latest practitioner panels' survey of regulated firms.

While the creation of the small firms division has been welcomed by smaller firms, "a lot of work remains to be done", said Mark Rothery, chairman of the smaller business practitioner panel.

In the panel's report, 55% of smaller firms were unclear about principles-based regulation, even though 75% supported it in principle.

Rothery added: "The fact that a considerable proportion of smaller firms report that they are now considering leaving the insurance industry due to the growing burden and cost of regulation should make FSA staff pause for thought."

He concluded: "Now is the time to double our efforts...to help create a regulatory environment in which smaller firms can thrive and prosper."