Reported on Mon, 10 Apr 2006

Monetary regulator the Financial Services Authority (FSA) has revealed proposals to reduce the amount of regulations that small businesses are forced to comply with, but a business loan could allow firms to make significant business investments.

The FSA has issued new recommendations ahead of a two-month consultation period to determine the effect of statutory audit requirements upon smaller firms as detailed under the 1985 Companies Act.

The UK's financial regulator believes that these audits are costing firms thousands of pounds every year, with small and medium-sized businesses (SMEs) collectively using up £12.9 million of resources every year in fulfilling regulatory requirements.

The Department of Trade and Industry (DTI) has already backed the proposals and if more support can be gathered by the end of the consultation period then steps will be taken to change existing legislation.

Stephen Bland, director of small firms at the FSA, said: "We are committed to better regulation. Small limited liability companies currently compete with sole traders and partnerships, which are not subject to audit.

"We are working with the DTI to produce a level playing field for these small firms which should promote competition and thus bring benefits to consumers."

SMEs worried about the effect of regulations upon their business success could take out a business loan to steady the ship.

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