New research from the Financial Services Authority (FSA) has found that many small businesses that employ compliance consultants are failing to heed their advice.
Of 22 small firms employing compliance consultants visited by the FSA in early 2007, nearly half still had significant weaknesses in respect of their regulatory requirements.
The research has shown that while small firms recognise that they must comply with regulations, they are not taking adequate steps to do so.
The FSA found that a third of SMEs do not even act on the recommendations made by their consultants which would improve their regulatory position.
Jonathan Fischel, the FSA's head of compliance in the small firms division, said: "Firms should always take appropriate action to be compliant.
"They cannot contract out their regulatory responsibilities and they should not assume they are fully compliant just because they employ consultants."
