The FSA is collecting background information on brokers to cross check against the information given on firms' application forms, according to a leading compliance consultant.

RWA Group director of compliance Alex Peterkin said that the regulator had revealed that it was amassing information and gossip about firms to catch out brokers who failed to disclose information on their application forms.

"The warning is: don't try and put one over on the FSA. If in doubt disclose."

The FSA has also warned that first impressions count, said Peterkin. "If an application form is scruffy or indicates that a firm has contempt for regulation it will be treated accordingly."

Peterkin added: "The FSA has processed 400 applications so far. The quality of applications has been higher than expected. The FSA is expecting to issue minded to authorise letters from the end of April."

The FSA also expects senior managers to "buy in" to regulation and not delegate the task to junior personnel, said Peterkin. "The FSA will ask questions of senior managers who give junior managers the task of compliance officer. It expects senior officers to take responsibility."

A spokeswoman for the FSA said: "We are going through an intelligence gathering process, but we don't want to go into detail about what we do, so firms can evade checks."

The spokeswoman also emphasised that the FSA was looking for "complete and accurate" applications.