Calls for FSA to refocus

The review revealed smaller firms in particular lacked appropriate advice systems, but Kevin Paterson, managing director of Park Row Mortgages, claimed directly authorised (DA) firms were largely left alone by the FSA and strssed the need for closer regulation.

He said: “For a relatively small sample of firms, the FSA has managed to find a lot of poor practise, which is indicative of wider problems. I have had advisers leave us because they were swayed by the notion that if they became DA they wouldn’t be as regulated. That’s not right.”

Andy Pratt, chief operations officer at Alexander Hall, urged the FSA to reappraise the advice it gives brokers: “I think it was a big mistake not to make suitability letters mandatory. If you’re operating under the radar, the letter would at least force brokers to think about what to put in letter and consult factsheets for advice.”

However, Samantha Bennett, spokesperson for the FSA, said the critcisim was unfair: “We have done an awful lot of work in the small firms division, with direct communication, targeted information, free roadshows and surgeries. We’re telling brokers to make sure they have the right processes in place to give consistently high quality advice.”