government guidelines and rules for the financial services sector

The past decade has seen a real shake up in the financial services sector and that would come as no surprise to those who have used some of the companies who were offering all sorts of products to business and to individuals. It was a rather murky industry and there were some less than perfect products on the market. It also attracted an element of un professional people who saw the industry as a quick way to make money.

So the government stepped in and made the industry tighten up in the ways in which it worked. Those offering financial services had to go through some sort of accreditation procedure, and the Financial Services Authority (FSA) was set up. They have become the watchdog of the industry, such that anyone who is unhappy with a financial advisor or a business finance consultant can make a complaint and that will be followed through. Needless to say, it drove the `bad guys` out of the sector and it has now become a much cleaner industry.

The government guidelines cover aspects which are based around the suitability of a financial product to the enterprise, and the ability to pay it back. These sound as though they are fairly basic requirements, but this is where many of the problems with debt have come from. The recent global financial upheaval is testament to that. All the financiers who are keen to provide assistance are now required to make sure their clients are not making claims which are not realistic, so the business financier has to be satisfied that the clients and the owner have their feet on the ground. The finance applied for has to have the back up of sound business cash flow projections and not be something the owner has dreamed up overnight.

So whilst there is scope for some latitude the financial sector is much more wary these days, and that can only be a good thing. The number of business failures has not increased too much over the past few years, but it has not decreased either. The companies who get the larger financial deals stand a much better chance of success, but the smaller business may well struggle. That is something which the FSA has tried to counter and along with the Chambers of Commerce have addressed with advice and recommended ways of operating a business. However, there are those who simply want to take their hobby a step further and turn it into a small business.