Treasury says reforms will not lead to extra costs
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The Government says the overhaul of the regulatory regime is unlikely to add additional costs to IFAs.
In its consultation paper on the implementation of the new regulatory structure, published this week, the Treasury says scrapping the FSA and creating the Consumer Protection and Markets Authority and Prudential Regulation Authority would cost the industry £50m.
But the paper says: “Most of the approximately 20,000 firms currently regulated by the FSA will be regulated solely by the CPMA. These firms are unlikely to suffer any significant transitional costs or significant increa-ses in ongoing costs.”
However, the financial services industry will bear the cost of the Consumer Financial Education Body and the £50m estimated annual costs of the Government’s new free national financial advice service, which are not factored in to the total cost estimate for the reforms.
Aifa director of policy Andrew Strange says: “Further consideration must be given to the costs of any changes. Firms already face a barrage of costs due to regulatory changes in 2012.”
The IMA has warned the costs of overhauling the regulatory system could quickly spiral.
Director of authorised funds and tax Julie Patterson says: “I cannot imagine this will cost less than £50m.”
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Readers' comments (1)
Julian Stevens | 29 Jul 2010 6:41 pm
Tthe paper says: “Most of the approximately 20,000 firms currently regulated by the FSA will be regulated solely by the CPMA. These firms are unlikely to suffer any significant transitional costs or significant increases in ongoing costs.”
So ~ let's see the Cost:Benefit Analysis on which this blithe assertion is made, not least the information and opinions on which it's been based and who contributed to its creation. Oh yes ~ just what do the authors of the report consider to be "significant"?
Given that cost-effective, economical and straightforward are words that simply don't seem to be part of the FSA's vocabulary, just what are the anticipated costs of transferring a thousand or two FSA employees to the CPMA? There'll be new stationery, new contracts of employment, maybe relocation (we hope but hardly expect to vastly less expensive premises), new carpets, logos and signage and probably a ton of other things as well. Given the FSA's propensity for spending other people's money as if it were Monopoly money, it would be optimistic to expect a bill of less than £10m, possibly twice that. Still, if there was a ban on any more bonuses, that'd cover it. And any FSA employees who are "disgruntled" about not getting their bonus ~ well, they can just FRO and seek employment elsewhere. Sorted!
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