Simon Bolam and Stephen Atkins were invited to serve on an FSA small business panel. Here is their inside view of regulation at work
Shortly before Christmas 2002, following an introduction from our trade associations, we became members of the FSA's small business practitioner panel. Until that point, while we were familiar with the role and work of the FSA, we had no knowledge of the panel or how it fitted into the regulatory structure.
The panel was established in 1998 to represent the interests of smaller firms from across the financial services industry, and its membership of 13 is drawn accordingly.
The publication of the panel's fourth annual report gives us our first chance to articulate reflections of our first few months as members and to summarise the work we undertake in support of smaller firms.
The panel meets monthly. In addition, sub-groups consider specific sectorial issues as they arise. We receive regular presentations from senior FSA staff on the development of regulatory policy, whether in connection with specific consultation and discussion papers or otherwise. And the views expressed by the panel are used by the FSA to help shape its thinking on particular matters.
The future regulation of the industry has created a great deal of work for the panel and, given the expertise for which we were appointed, we have been heavily involved in the panel's output.
It is of course of huge importance that the policy decisions taken by the FSA, as the proposed framework makes its way into the handbook are workable, proportionate to the risks involved and recognise the way in which the industry sectors operate.
We are assured by the FSA that this situation is recognised and that there is no hidden agenda aimed at reducing the number of smaller firms operating in these areas.
We are conscious that many thousands of smaller firms will be subject to the new regime, many of which face regulation for the first time. The extent to which firms fully appreciate the fact that regulation is almost upon them and how well they are preparing for statutory regulation concerns us.
We urge firms to take very early steps to prepare themselves for FSA regulation, both in terms of getting used to the basic disciplines that will commence shortly and building up an understanding of the rules and guidance to which they will be subject.
We would also strongly encourage firms to respond proactively to papers from the FSA - this is something of a numbers game and considered views really can make a difference. It is not necessary to respond to each and every question posed; the FSA is happy to receive general comments - any views submitted, and on whatever basis, will be given due consideration and weight.
We enjoy a constructive dialogue with FSA staff and are encouraged by the positive way in which they respond to comments.
While we are officially a part of the FSA machinery, the panel is independent. We are fundamentally not a body established by the FSA to appease the masses, but do have real ability and power to influence proceedings.
The panel's fourth report includes the number of reviews and consultations that are ongoing, and their regulatory impact. We feel there is a real danger of initiative fatigue.
The construction and format of the handbook is also something that will be of specific interest to those joining the FSA in late-2004 or early-2005 - we consider there is much room for improvement here. For example, we have pressed hard for the mortgage and general insurance sectors to have their own dedicated sourcebooks, which we are pleased to see that the FSA has taken on board.
Finally, we very much want to hear your views. While we cannot respond individually to each and every communication, your feedback would certainly help. Although we are practitioners in our own right, our work on the panel is undertaken in something of a vacuum and the more of you we hear from, the better informed we are about the feelings of our respective sectors that comprise a significant number of smaller firms.
The panel can be contacted by email, email@example.com / claire.strong @fsa.gov.uk, or in writing to the FSA's offices at 25, The North Colonnade, Canary Wharf, London E14 5HS.
The panel's fourth annual report can be downloaded from: www.fsa.gov.uk
Simon Bolam is with EH Ranson & Company and Stephen Atkins is with Mortgage Next