In its biennial survey of regulated firms about the FSA’s regulatory performance, the overwhelming majority of firms (85%) recognised the need for strong regulation. This is an increase from the last survey, undertaken in 2006, when 79% saw it as beneficial.
However, there is at the same time a widespread belief across the industry that the current regulatory system places too great a burden on firms: 82% of firms agreed with this in 2008, although this was slightly lower than the 86% in 2006.
The level of satisfaction with the FSA as regulator varied according to type of firm and how they interact with the FSA. The results showed a consistent pattern that firms with a designated relationship manager at the FSA were more satisfied than those without a relationship manager (64% and 43% highly satisfied).
The impact of having a relationship manager is clear, as the results also show that those firms who had no turnover of relationship manager in the last two years were more highly satisfied than firms that had seen two or more changes in relationship manager (71% and 56% respectively).
Wholesale firms are typically more satisfied, when asked about the FSA’s performance and/or their regulatory relationship, than retail firms but the gap has narrowed. Smaller firms remain less satisfied than larger relationship-managed firms, but again there are signs that the gap is closing.
Satisfaction with the FSA’s Firm Contact Centre has improved, as has the quality of guidance it provides, especially with those (mainly smaller) firms who have used that facility in more recent times. Smaller firms with less than 20 full time staff, firms without a relationship manager, and retail firms were all more likely to see the current regulatory system as being too great a burden on firms. Almost half of very small firms (44%) agreed strongly that regulation was too great a burden compared with just over a quarter of firms with 20 or more full time staff (27%).
Nick Prettejohn, Chairman of the Financial Services Practitioner Panel said:
“This survey gives a useful readout of the attitudes of the industry to regulation taken around the middle of 2008. Not surprisingly, there was a sharp decline in the rating given by the industry in the rating of the FSA for maintaining confidence in the financial system, although there was no change in firms' rating of the FSA's performance versus its other objectives. It contains messages that the FSA is already responding to post Northern Rock – that effective supervision by people who understand the business issues and industry needs provides the best type of regulation. The more that the FSA communicates and interacts with the industry, the more effective its regulation will be. We in the industry recognise the need for regulation, particularly at this time, and we stand ready to engage in that process with the FSA.”
Nick Prettejohn (Chairman), Chief Executive, Prudential UK and Europe;
Roy Leighton (Deputy Chairman), Chairman, Financial Services Skills Council;
Simon Bolam, Chairman, E H Ranson & Co;
Russell Collins, Head of Deloitte UK Financial Services Practice;
Iain Cornish, Chief Executive, Yorkshire Building Society;
Clara Furse, Chief Executive, London Stock Exchange;
Douglas Gardner, former Distribution Director Positive Solutions;
Colin Keogh, Group Chief Executive, Close Brothers Group;
Roger Liddell, Chief Executive Officer, LCH Clearnet Group Ltd;
Helena Morrissey, Chief Executive Officer, Newton Investment Management;
Gordon Pell, Executive Chairman, The Royal Bank of Scotland;
Andrew Ross, Chief Executive, Cazenove Fund Management;
Patrick Snowball, Deputy Chairman, Towergate Partnership Limited;
Alan Yarrow, Vice Chairman, Dresdner Kleinwort.