The Financial Services Authority is bombarding member firms with so much written material that it is hampering compliance activities, according to a survey conducted by the Chartered Institute for Securities & Investment (CISI).
The CISI study finds that the high volume and wide variety of written material sent to firms by the UK regulator is weakening rather than helping good compliance.
Of respondents, 88% said that "the volume of FSA material with which I have to keep up to date is a serious drain on the compliance resource within my firm".
Additionally, eight out of ten CISI compliance sector members said a cut in FSA output would actually improve compliance at their firm.
The CISI is urging the FSA to reduce what it refers to as "a counterproductive burden". Representation is being made by the CISI compliance professional interest forum (PIF) to the Financial Services Practitioner Panel (FSPP), the body that provides industry input to the FSA.
The CISI Compliance PIF found that between 1 January and 16 March 2011 the FSA issued 111 documents, comprising 1,929 pages. This output included 15 different types of document, ranging from formal discussion papers, consultation papers and policy statements, through enforcement final notices to 'informal guidance' including newsletters and speeches.
The CISI Compliance PIF chairman, Julian Sampson Chartered FCSI comments: "Part of the problem is that firms feel compelled to read almost everything produced by the FSA (69% of those surveyed said so). This is because the distinction in impact between different documents is blurred. While the FSA does use a 'star rating' system, indicating the relative importance of its material, this applies only to formal documents, such as consultation papers and policy statements."
Sampson suggests that the FSA should extend the star-rating system across all of its written correspondence, and cut back on the volume of informal guidance notes, newsletters and press releases.
Additionally the regulator should co-ordinate its output in line with compliance directives emanating from Brussels, says Sampson, and avoid issuing its own documents on the same subject when it is known that EU consultation is in hand.
"While the CISI Compliance PIF understands the FSA needs to react publicly and swiftly to fast-moving events, we feel that the spread of issuance is out of proportion with any perceived problem," says Sampson.