Networks facing further criticism from FSA?

Angela Faherty

June 17, 2006

This will include details on hitting business targets such as recruitment levels, profit and turnover and processing costs.

Following the regulator’s attack on the shortcomings in the way in which networks supervise ARs in December 2005, the source said: “The FSA is due to publish findings of its review within the forthcoming weeks, which has varied findings on whether every network is achieving what it originally set out to do. One of key things that could emerge is a creation of a premier league of networks, which could create a massive distinction between those networks meeting targets and those failing to do so.”

The source suggested the findings show both the FSA and networks have underestimated the time and financial costs of compliance and said some of the smaller networks do not have the critical mass to last more than five years.

An FSA spokesperson confirmed that its study of the way networks operate is ongoing, but refused to give specific details on its current work. He said: “The initial review of approximately 15 networks in December 2005 was very powerful and highlighted that where there were failings, they must be improved. The review is a continuous process to ensure compliance and to guide those firms on how to achieve this.”

Commenting, Tony Jones, managing director at Pink Home Loans, said: “I am not at all surprised the FSA is continuing its investigation into networks and ARs. But I do not think it is necessarily a distinction between large and small firms but a case of focusing too much on hitting recruitment targets rather than assessing quality of those ARs they are taking on.”

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