EDITORIAL: Don't ignore the FSA regulations

Despite the general lack of concern shown by some City PR firms

about the Financial Services Authority regulations set to come in to

force next month, the sector needs to recognise the size of the

challenge facing it. Under the FSA's stiff new rules on market abuse, it

is not necessary for the body to prove in a criminal trial that insider

trading has taken place, just that a reasonable person would infer as

much. Unlimited fines may follow.

There are key steps financial PR firms should be taking - indeed should

have been taking since the implications of the FSA code first became

clear a year ago. Because the whole basis of the work they do is to

protect shareholder value - in stark terms, to manipulate markets - they

are going to need to be able to defend themselves when the regulator

comes knocking.

For a start, the sharper practices of City PROs will have to end, if

only to convince the FSA of the general trustworthiness of the sector

and buy some much-needed goodwill. The bell tolls clear for the Friday

night drop.

It is hardly a romantic rallying cry for the future of City PR, but

compliance and audit issues are also key. Agencies need to put in place

mechanisms to ensure both that they are not engaging in market abuse,

and that they can demonstrate as much. On the former, larger agencies

may need a compliance officer to guarantee they do not fall foul of the

first real attempt to regulate the sector's activities. On the latter,

when appealing against the expected flood of early negative FSA

decisions, some paper trail of valid decision-making will be


The costs associated with putting in place these changes need not be

high, and if any part of the PR sector has wide enough margins to take

the hit, it is the Square Mile. Even for those with shrinking margins

due to the downturn, this is preferable to the prospect of unlimited

fines being levied by the FSA watchdog.

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