The FSA is to examine how the cost of regulation affects small brokers.

In the Treasury's review of the Financial Services and Markets Act [2000], which governs the FSA, the regulator was given the task of cutting the burden of compliance.

FSA chairman Callum McCarthy said the review's outcomes were in line with the FSA's own business priorities.

He said, in particular, the FSA intended to look at the cost of regulation for smaller firms, such as brokers.

Biba has responded cautiously to the outcome of the Treasury's review of the FSA.

Biba chief executive Eric Galbraith said: "I look forward to the actual outcome to see what the results are.

" I do not wish to see any more regulation. We already have a regulatory environment that comes into effect in January, so we have enough regulation going forward."

The Treasury's recommendations included reducing the amount of consultation and improving cost-benefit analysis work.

McCarthy said: "We recognise that the cost of regulation falls disproportionately on smaller firms.

"One of our business priorities for the coming year will be to examine the impact of our regulation on this sector."

He said input from the independent practitioner panel would form a key part of future plans, to be announced in the FSA's 2005/06 business plan, to be published in January.