How does the Panel meet its objectives?

The Panel meets every month. In addition, sub-groups consider specific sectoral issues as and when required. The Panel receives regular presentations from FSA staff on the development of regulatory policy and operation; for example, in connection with particular consultations and feedback/policy statements that have small business implications. The FSA then uses the Panel's views to help shape its thinking on the matters in question.

As and when required, the Panel is afforded direct access to the FSA's senior management and Board.

The Panel also responds formally in writing to FSA Consultation and Discussion Papers where there are relevant to smaller businesses. A rolling summary of those responses is held on this site.

How can I find out more about the Panel's work?

The [Panel's fifth Annual Report] was issued in June 2004. This highlighted a number of issues past and present - of importance to small firms. It included concerns about the number of reviews and regulatory initiatives that were ongoing, and the burdens that these create - the Panel believes that small firms would welcome a period of relative stability. Also included are views on the construction, format and application of the FSA Handbook of rules and guidance.

Generally, the Panel welcomes the responsible and positive way in which the FSA listens to and reacts to many of our submissions. But the recent survey undertaken by the Practitioner Panel - Survey - makes clear that small firms do not believe that the FSA does anywhere near enough to understand the pressures that smaller firms face on a daily basis and seek to accommodate them

We consider that some of the main issues for small firms are

• The costs of compliance;
• The pace, complexity and burden of change;
• The disproportionate and/or disadvantageous impact of regulation (both in respect of individual initiatives, and cumulatively);
• The need for the FSA to apply and enforce regulation with suitable pragmatism;
• The usability of the FSA Handbook of rules and guidance;
• The helpfulness, reliability and timeliness of individual guidance;
• The engagement of small firms in FSA policy-development and decision-making processes;
• The damaging effect of super-equivalence in the context of international legislation;
• The desire for the FSA to further develop the use of de minimis thresholds and transitional periods for small firms to assist them in the implementation and assimilation of new provisions;

There remains much room for improvement in the FSA's treatment of small firms and although we have been encouraged by many of John Tiner's and Callum McCarthy's messages to the Panel and to the industry, the key will be to turn these positive statements into concrete actions on the ground.

That said, we acknowledge that, in a number of areas, some improvement has already been made - for example, the production of fewer and shorter consultation documents, and the accessibility and navigability of the Handbook. The Panel also hopes that once it has been fully embedded - the new FSA structural, operational and cultural arrangements will start to see direct benefits for small firms.

Many smaller firms do not have access to dedicated compliance resource and expertise - unlike their larger counterparts. Against this background, it is all the more vital that the Panel and the FSA remain alert to ensure that small firms are heard, supported and encouraged. This is even more crucial given the vast number of smaller firms that now come under the FSA's auspices with the recent introduction of mortgage and general insurance regulation.

What's next for the Panel?

Over the past few months, the FSA has made a number of clear public commitments regarding the regulation of smaller firms. These statements – which the Panel welcomes – have followed the Practitioner Panel survey and the HM Treasury 2-year-on review of the regulatory and legislative infrastructure. The survey in particular paints a rather negative picture when it comes to small firms' perceptions of the FSA's effectiveness. For its part, the FSA accepts that small firms find regulation (in its current form) a real challenge, and therefore intends to take forward a number of steps and measures designed to mitigate the difficulties and burdens that they face. These various initiatives are summarised in the FSA's Business Plan – published in January 2005 – and the Panel's own [press release] puts our response to this crucial document on the public record.

The Panel will be monitoring the development of these initiatives, and the overall impact and effect that they are having on small firms – individually and as a sector - on an ongoing basis. It is imperative that they are successful, and the Panel shall ensure that the FSA has a sufficient degree and nature of engagement with us to help ensure that this is indeed the case. The Panel will be suitably proactive and forthright where we believe it is not.

One key initiative is the joint FSA/Practitioner Panel research into the drivers and quantum of compliance costs. This work will have a specific focus on small firms, and the Panel Chairman – Ruthven Gemmell - will be taking an active role in the formal oversight arrangements. The ultimate outcome will – the Panel hopes - be the identification of areas where there may be legitimate scope for costs to be reduced.