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FSA Enhanced Strategy Set to Commence

The Enhanced Strategy to bring small firms in line with the Treating Customers Fairly initiative is set to begin in March.

Beginning in Northern Ireland, will be a programme of rolling assessments that will take in over 11000 smaller financial firms over the course of three years.

The strategy was announced by the Financial Service Authority's Chief Executive, Hector Sants at a forum on 2 October, last year that includes an ongoing "programme of structured visits and/or telephone assessments to test the quality of management and progress towards embedding TCF."

Its aim is to allow firms assess their individual risk profile and help them target resources to areas that pose the biggest risk to their objectives.

A progress report published in 2007 showed that just over four-in-ten small firms were meeting the TCF deadlines.

The strategy will increase the level of supervision and contact with small firms. It will provide additional support for those embracing TCF, but take a tough line for those that do not.

Initially contact will be made through regional roadshows and supported by telephone interviews and site visits where necessary. It is expected that some 3000 firms will be assessed this year, increasing to 4000 by 2009. As estimated one-in-four firms that raise initial concerns will be visited by the FSA "to verify the assessments and follow-up identified issues."

Commenting on the announcement FSA Director of Small Firms, Stephen Bland said: "TCF is an existing regulatory priority, but the deadline for firms to prove to us, and to themselves, that they are consistently treating their customers fairly is fast approaching - December 2008.

"It is imperative that firms engage with TCF and drive up standards. The new style roadshows together with the assessments will help accelerate this process. The measures will have an additional cost to intermediaries, but this should be outweighed by their positive effect on both consumer protection and confidence in the financial services industry," he added.

Mark Rothery, Chairman of the Smaller Businesses Practitioner Panel, said: "We wholeheartedly welcome the FSA's package of measures. Whilst these efforts will not come without some additional cost, this is far from being a false economy - in fact, the Panel sees it as something of a win/win proposition. This strategy will incentivise those smaller firms motivated to comply; and act as a meaningful deterrent to the laggards that either seek to do otherwise or who try to fly under the FSA's radar."