Govt pledges red-tape reprieve for SMEs in FSA shake-up

The government will look to exempt small financial services firms from further regulation for three years when it writes new powers for the FSA's successor.

Secretary to the Treasury Mark Hoban told MPs the moratorium announced by the Chancellor in the March Budget would not affect the FSA's current regulations, including the RDR.

But he said it could be applied when the new regulatory structures are put in place, and the government would seek to write this into the statute books.

"Where the government is granting new powers to the FSA through primary and secondary legislation, we will look to apply the moratorium," he said.

The pledge comes just hours after the FSA published new proposals calling on advice firms to provide detailed data on complaints against individual advisers and adviser charging.

Hoban's statement was in response to a question during Treasury questions by MP Harriett Baldwin in the House of Commons.

She asked what steps the government will take to ensure the FSA exempts businesses employing fewer than ten people and new businesses from new regulation.

She reminded the government of the FSA's own estimate up to 10,000 jobs could be lost as a result of RDR, and urged Hoban to meet with FSA chief executive Hector Sants "urgently to discuss ways the impact could be mitigated".

Hoban did not indicate whether he would meet with Sants, though he underlined to the House the FSA's "obligation to make its rules proportionate" when assessing the impact of rules.

He also pointed out the FSA's own announcement it was not planning any more new initiatives in its 2011/12 business plan.

Under the proposed new regulatory structure, the Financial Conduct Authority will be responsible for overseeing the conduct of advisory businesses, while the Prudential Regulation Authority will be responsible for the safety and soundness of authorised persons.