Smaller advisory firms are to be surveyed by the UK’s financial watchdog to determine the effect regulation has on them.
An independent consultancy will work on behalf of the Financial Conduct Authority to conduct in-depth interviews with a small representative sample of financial services firms over the next month.
In addition to advisory businesses, other types of firms that will be surveyed include: mortgage advisers and lenders, general and life insurers, wealth managers, private banks, investment managers and stockbrokers.
The survey will “help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances”, the regulator said.
The interviews will inform the design of an online questionnaire that will be sent to a larger sample of firms in April and May.
A small firm is defined as holding less than £1m ($1.28m, €1.13m) of total client money during the last calendar year.
A large firm held more than £1bn, with medium firms falling between the two.
Tough times
The regulatory climate has been identified as one of the key issues driving advisers out of the market.
In the latest industry report from trade association Libertatem, regulatory costs was named alongside capital adequacy, professional indemnity insurance and the actions of the Financial Ombudsman Service as significant barriers for firms.
A strong shift in the industry’s demographics also showed that there are far higher numbers of advisers retiring than joining the profession.
Changes by the FCA in how it implements regulation could make it easier for smaller firms to be set up and run.
