The Financial Conduct Authority has recognised the level of reporting creates a burden for smaller firms, but said it was proportionate to the overall benefit it provides.
The acknowledgement from the FCA came in response to a Wolverhampton-based adviser who contacted his MP over continued data-gathering exercises from the City watchdog.
Before parliament was dissolved at the end of May, after former prime minister Rishi Sunak announced a snap General Election, adviser Julian Pruggmayer had contacted his constituency MP, Sir William Cash, to complain about the burden of regulation on small firms such as his.
Cash is no longer a member, but was most recently the Conservative MP for Stone. While in office, he had taken up Pruggmayer's request to help address the rising burden of regulatory reporting.
As previously reported by FT Adviser, what started out as the so-called 'Covid surveys' from the FCA to assess the financial health of advice companies during the pandemic have become regular features of the reporting year, with advisers complaining about the frequency of form-filling required.
In his letter, Pruggmayer questioned why the levels of reporting were getting higher for regulated financial services companies, compared with other professions such as law, and what the Treasury intended to do to help smaller firms in particular cope with the rising burden of reporting.
Cash agreed to put these concerns to the Treasury, and asked it to respond, given its oversight of the regulatory body.
But the Treasury passed the letter onto the FCA, which responded to Cash as "the appropriate organisation to do so".
In the letter, seen by FT Adviser, the FCA said: "As the regulator, we collect information from firms, which enables us to understand at an early stage how markets are operating, and to intervene and minimise harm.
"Additionally, we are required under the Financial Services and Markets Act (FSMA) to ensure that the data that we provide on the Financial Services Register (FSR) is accurate."
However, the regulator acknowledged that this can create additional time and cost pressures on smaller companies.
The letter said: "We recognise that this level of reporting creates a burden, in particular for smaller firms. When introducing a new return form, we consult with affected parties before doing so and prepare a cost-benefit analysis, to ensure that any burden is proportionate to the benefit it provides."
Signed by Greg Sachrajda, director of cross-cutting policy & strategy for the FCA, the letter also told Cash it was working on how to collect the data it needed without adding to the burdens on the industry.
The letter said: "We are currently undertaking a significant programme of work in partnership with the Bank of England, focusing on Transforming Data Collection.
"It aims to develop solutions enabling the FCA and the BoE to collect the data we need to fulfill our missions at the lowest possible cost to the industry. In March we published our latest update on this work. Further information on this work and its progress can be found on the website."
