Scope to cut fees

Your article on Financial Services Authority (FSA) regulation raises several issues (see [2002] Gazette, 7 March, 8).

I would like to explain how the FSA can help firms which are considering whether they should remain authorised by the FSA or not.

In its plan and budget 2002-3, the FSA acknowledged that: 'About 1,400 professional firms who conduct mainstream investment business now have their financial services business separately regulated for the first time.

Past experience suggests that the number of regulated firms may change significantly over the first year.

Some firms, as they come to understand the new regime better, may conclude that their business does not need to be authorised; others may decide to withdraw from authorisable activities.

We will try to make these processes as smooth as possible.' Firms that wish to withdraw from authorisation should contact the cancellation team in the corporate authorisations department at the FSA, which will be able to explain the process.

Some 6,220 firms were formerly authorised by the Law Society for investment business, and only 230 (less than 4%) opted into FSA regulation but have subsequently withdrawn.

Many of these did so before N2 by following the process designed for them by the FSA.

Some 349 firms (6%) remain authorised by the FSA.

The FSA's 'Opt-In Pack' was sent to firms at the end of last August, and a helpline was available for firms to call with queries.

The Society then issued its own guidance, which complemented ours.

Still, some firms were confused by the introduction of the legislation.

The FSA is willing to work with the Society and HM Treasury to clarify aspects of the legislation which are causing concern.

Firms will shortly be sent scope of permission notices and will be given the opportunity to reduce their permission to a scope which matches their actual activities.

This will reduce their direct regulatory fees.

David Kenmir, director, investment firms division, Financial Services Authority