Cost fears over FSA
Changes to regulatory regime could hit small firms with unnecessary expenses
Small accounting practices involved in the investment business couldexpenses. be hit with huge and unnecessary increases in their regulatory costs, once the Financial Services Authority starts monitoring the profession next year.
The FSA is not yet monitoring accountants but will regulate those offering investment advice once the new Financial Services Bill becomes law.
The bill is due to the published later in the spring and is expected to reach the statute books in early 2000.
In its response to Treasury consultation on the new supervisory arrangements, ACCA said the current definition of investment advice was too vague, and could generate unwarranted costs resulting from the FSA supervision.
The association warned the new structure would be prohibitive as it would hit accountants involved in the investment business, including those who did not give specific product advice.
ACCA director Anthony Booth said: ‘We are keen to have a clearer definition of what constitutes investment business to avoid the situation whereby firms not involved in investment have to remain authorised by the FSA.’
ACCA argued that its members are already regulated. If firms had to seek authorisation on a precautionary basis, it would cause confusion and rising costs.
It is calling for narrow definitions which clearly state what constitutes investment business and what activities may fall outside of this remit.
Booth said an accountant assisting a client to sell shares, for example, should not be included because it is not recommending a named product.
This was an ‘execution-only’ deal, he said.
ACCA has also requested a clearer understanding of the meaning of what constitutes ‘managing investments’ and ‘investment advice’.
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The FSA, which is currently in negotiation with the Treasury to refine the bill, said it was sympathetic to calls for transparency.
A spokesman said he understood accountants’ concerns that they may end up having to pay for regulation which they did not need, and said that the authority would consider all responses.