Most accountancy firms will avoid a major hike in fees under the Treasury's final proposals on the regulation of investment business. The majority of firms will continue to be monitored under their existing arrangements. Many had feared that smaller firms would be hit particularly hard if they were regulated by the Financial Services Authority, forcing them to stop offering their clients incidental investment advice as part of their service. But FSA chief Howard Davies said: 'We intend that these activities should generally be regulated as part of the conduct of the profession by the relevant professional body, subject to the regulatory arrangements being made very clear to their clients.' Only 2,000 firms - including accountants, solicitors and actuaries who offer investment as a mainstream part of their business - will come under the FSA's remit when the Financial Services and Markets Bill receives royal assent, expected at Easter next year. ACCA director Anthony Booth was delighted with the response, claiming that the body had been extremely concerned that the increased cost and demands of FSA regulation would be completely inappropriate to the advice given. 'At the moment, we can offer precautionary authorisation at an economical rate because we also monitor these firms for audit. The FSA will require us to keep an eye on those people doing incidental business to make sure they are not going further than they should. The government has come up with a very sensible solution,' he said. Small Practitioner's Association chairman Peter Mitchell echoed these sentiments, adding that it would help practitioners to continue to provide an element of investment guidance that is a valuable part of the service. The FSA has yet to finalise the details of its supervisory regime, but a consultation paper will be issued within the next few weeks that will be sent to all those firms which will now be regulated under the new system. Finance director Paul Boyle said the fees would increase from the amounts currently paid to the professional bodies while Booth warned that firms under FSA guidance would also be under a stricter regime because accountants would find themselves under the same rules as other professional advisers.
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