The Panel said that with the upcoming regulatory changes, such as the implementation of European directives and the Retail Distribution Review, it would be essential for brokers to actively engage with the regulator and for the FSA to ensure communications are clearer, better targeted and accessible for small firms.
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Yet, it noted progress had been made with the small firms division.
Mark Rothery, chairman of the Panel, said: “Rather disappointingly only 41 per cent of smaller firms met the deadline for implementing the FSA’s ‘Treating Customers Fairly’ initiative. This does not mean that smaller firms are treating their customers unfairly. But it does suggest that smaller firms lack the information and motivation needed to drive forward the development of TCF processes.
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“The Panel strongly feels that the FSA needs to look carefully at its means of supervising smaller firms and would like to see a reallocation of resources in order to facilitate greater personal contact and interaction with smaller firms.
“The Panel believes that if the FSA is able to continue to raise its game in respect of communication and support for small firms, small firms will follow suit and more consistently meet the FSA’s expectations.”
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Samantha Bennett, spokesperson for the FSA, said: “We’re always looking for new ways to engage with small firms and recognise improvements can be made. We do a considerable amount of work already. However, it is a two-way street – firms have to engage with us.”
