Thank you Chairman; good morning ladies and gentlemen

Although not having the Statutory Status, underpinning the other two Panels, the Smaller Businesses Practitioner Panel is nonetheless offered exactly the same high standards of support from the FSA as are provided to our colleagues in the Practitioner and Consumer Panels. Such a position is of course greatly appreciated and heavily utilised.

If you come from a smaller firm’s background then I think you could be excused for feeling a real sense of frustration that the effects of the recession, with all its economic consequences, have been far too focused towards the difficulties faced by many of the larger financial institutions, with particular reference to the banks and building societies.

Yes, it has also been a real tough year for the majority of smaller regulated firms. Many firms have faced enormous challenges with, I would suggest, the mortgage intermediary sector being hit the hardest.

It is, of course, within the context of these difficult conditions that the Panel has been seeking to represent the interests of smaller regulated firms, with our restyled Annual Report hopefully portraying in a positive light, the work undertaken by the Panel during the last year. Our Annual Report highlights the main areas of the Panel’s attention in the last year and I would now like to take a few moments to draw your attention to those ongoing issues that are particularly exercising our minds.

It almost goes without saying that the Burden of Regulation and the Cost of Regulation constantly sit at the top of our agenda.

The Panel continues to work closely with the FSA to monitor the overall burden of regulation during a period when very many smaller firms are struggling to trade through the worst economic conditions of recent times. In particular, we do get concerned when we perceive that a ‘one size fits all’ solution, considered fair and reasonable for one sector, is then, in the apparent interests of standardisation, being considered as appropriate right across the board.

On the same basis we are constantly vigilant for any unnecessary or unwarranted ‘read across’ from any new areas of regulation – such as the Retail Distribution Review – into another.

Equally, we continue to stress the importance of planning the implementation of all new initiatives in a joined-up manner, to ensure that any one sector is not hit by several major projects at the same time – such as the Retail Distribution Review, higher capital requirements and expected Financial Services Compensation Scheme payments all potentially hitting the Independent Financial Advisor sector at the same time. Although I am glad to report that I have now received an assurance that this particular example is now actively being managed.

Having said that, the Panel greatly welcomes the open invitation to input its own priorities as part of the process of establishing next year’s Business Plan. From our point of view, being encouraged to contribute in such a manner sends out a very positive signal.

Two main issues concern the Panel, in relation to the Cost of Regulation: the first relates to regulatory fees and the second to the exposure of smaller businesses to payments under the Financial Services Compensation Scheme.

Although the Panel, on behalf of the smallest businesses, greatly welcomed the freeze on the minimum regulatory fees, together with the subsequent revision downwards of the fees as applied to many intermediary firms, nonetheless very many smaller firms, who had not contributed to the current problems, faced increases that were very widely seen as disproportionate and unfair, particularly bearing in mind current market trading conditions. Indeed, in our Report we have stressed the serious need to appreciate that the recent very sizeable increases in the FSA’s budgets are unsustainable to smaller businesses operating in areas that have not contributed to the current problems.

The Panel remains in close consultation with the FSA as to how best to manage the potential and significant FSCS liabilities that are likely to fall upon smaller businesses as a result of the decision that they should cross-subsidise the losses incurred, particularly by large businesses, within other sectors of the financial community. It cannot be under estimated that, unless very carefully managed, these levies could potentially wipe out many thousands of smaller firms who have never put a foot wrong but are nonetheless very likely to be required to cross-subsidise the very significant failures of larger organisations, about which everyone here is I am sure familiar.

Time is limited so I would like to finish on a couple of positive notes.

The Panel enjoys its close working relationship with Lesley Titcomb, Director of the Small Firms & Contact Division, who attends our monthly meetings to update us on smaller firms’ issues and to exchange general market information.

In particular the Panel has been impressed by the work undertaken by Lesley and her team to improve communications with smaller businesses in order to address the concerns highlighted in the 2008 Practitioner Panel’s Survey.

Everyone understands that good and effective communications with smaller businesses is seriously important and it is highly revealing to see that those firms with whom the FSA has established direct contact feel much more positive and confident about their relationships with the regulator. This of course is an important element of the Panel’s strong support for the Small Firms Enhanced Strategy, which brings large numbers of firms into physical contact with the FSA, as it targets different parts of the country in its bid to engage with large numbers of firms in the most cost-effective and efficient manner.

As I said towards the beginning, this has been a particularly tough trading year for most smaller businesses; however, from my position as representing the Smaller Businesses Practitioner Panel, it has been a highly productive year during which we have seen very significant improvements in the manner by which we work and interact with the FSA at all levels. With the strong support and encouragement of Hector, Jon Pain, Lesley Titcomb, and Iain Brown (the Company Secretary) and his team, the Panel now feels very much more positive about its effectiveness on behalf of smaller firms. And no this does not mean we are going ‘native’, it is just that we now have many more doors we can more readily push open, with many more willing ears with whom to exchange our thoughts and concerns, and all at times when the issues matter most.

These are great facilities, which we are openly encouraged to use and, so far, from the results gained from the feedback received, are working very much better for both smaller businesses and the FSA itself.

Ladies and gentlemen thank you for listening to me.