Small insurance brokers must take care in completing their FSA application forms because the compliance burden is more onerous than it may first appear, warned insurance law firm Reynolds Porter Chamberlain (RPC).
RPC said the high street firms application pack was relatively straightforward to complete, particularly for small firms, but that it did not reveal the continuing burden of compliance.
It said one section of the form required small firms to simply tick a box, without the need for supporting documentation. However, the firms would still need to draw up, review and retain detailed information relating to compliance issues because of requirements set out in the FSA's handbook.
Harriet Quiney of RPC's financial services team said: "If small firms just tick the yes box, but don't actually comply, the FSA could fine them or remove their authorisation, without which they could not continue their insurance mediation activities, effectively forcing them to close.
"Completing the application should be the final stage of the compliance process, not the beginning.
"Brokers should already be starting to take the necessary steps now if they are to fulfil the compliance obligations by January 2005, but the simple format of the form could lead unsuspecting brokers into the false belief that nothing further is required of them."
