FSA cost of RDR set to pass £3m
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The FSA has spent £2.95m so far on development of the retail distribution review.
The figure has been revealed in response to a Freedom of Information request by Highclere Financial Services partner Alan Lakey, who is also director of Adviser Alliance.
The regulator’s costs comprise £2,061,000 on internal staff working on the RDR, £249,000 on project management and £643,000 on consultants and agencies.
Lakey says: “The counter is ticking as we speak. Add to this the £500m it will eventually cost with one-off and annual accrued costs and it can be seen as the biggest waste of funds since the Dome.”
An FSA spokeswoman says: “These costs have been spread over almost four years and include policy development from initial discussions, through to industry consultation, and then publication of final rules.
“Levels of consumer detriment in the retail investment market are estimated at £223m per year. The RDR in general and adviser-charging specifically will go some way to correcting these failures before they get a chance to impact the market.”
In March, the FSA’s estimated incremental compliance costs for the first five years of the RDR skyrocketed to between £1.4bn and £1.7bn from its previous estimate of £600m. Estimated one-off costs rose from £430m to £605m-£750m. Its estimate of ongoing costs jumped from £40m to between £170m and £205m.
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Readers' comments (17)
Anonymous | 19 Aug 2010 10:19 am
“Levels of consumer detriment in the retail investment market are estimated at £223m per year. The RDR in general and adviser-charging specifically will go some way to correcting these failures before they get a chance to impact the market.”
Prove it.
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Anonymous | 19 Aug 2010 10:20 am
Here we go again the FSA wasting our money on what really is a complete load of rubbish. It is time the government stepped in and stopped those idiots in Canary Wharf from screwing up the UK Finace industry and having a total disregard to using our money wisely
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Patrick Schan | 19 Aug 2010 10:23 am
The FSA spokeswoman says “These costs have been spread over almost four years". What difference does that make?
It's actually worse than the biggest waste of money since the dome, as it is a huge sum to pay for something that will be to the detriment of public interest and for the loss of thousands of good advisers and, in many cases, the tax they pay, as a consequence.
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Anonymous | 19 Aug 2010 11:02 am
"Levels of consumer detriment in the retail investment market are estimated at £223m per year"
I must admit I have not seen this comment before -- but it is a bit difficult to plough through all of the comment and literature pouring out of the ivory towers.
However, if the levels of detriment are at £223m per year, is this not a full admission that the FSA regulatory model is broken and should be totally scrapped ?
As far as comments comparing the cost with the Dome - at least we have the Dome - after all the money that is spent by the FSA what do we have - lots of hot air and a few (very expensive) works of art which will eventually be sold for pennies on Ebay !!
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Stephen Charles | 19 Aug 2010 11:08 am
It was hoped that a new incoming Government would have put a stop to this beurocratic lunacy that is the FSA. It appears that is not to be the case with Hector back at the wheel! It beggars belief what these morons are able to do in the name of protecting the public - show me how they have protected anybody since they were inacted apart from their own high salkaries and bonuses of course.
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Michael Fallas | 19 Aug 2010 11:22 am
waste if monet as is the FSA
Better to spend it compensating consumers. sine 20004/5 FSA, FSCS and FOS costs £3 Billion FSCS compensation payouts for the same period only £2 Billion and a fair proportion of that was due to the banking crisis.
The FSA is not cost effective, period.
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Simon Mansell | 19 Aug 2010 11:29 am
Of course this takes no account of the loss in value of an IFA business practice induced by a forced sale with the uncertainty of the continued trail fee income.
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Julian Stevens | 19 Aug 2010 11:30 am
Notable by its absence from the response from the FSA spokesperson is any mention of the massively rigged Cost:Benefit Analysis on which the RDR has been launched. So what's a jump from £600m to £1,400m (and maybe more) in the grand scheme of things? As far as the FSA is concerned, who cares? It's not their money after all and to back down now would be to "lose face" and we can't have that, can we, what with the name of the FSA already being about as deep in the mud as it's possible to be.
And then there's the issue of levels of consumer detriment in the retail investment market being estimated at £223m per year. Oh yeah ~ by whom and by what methodology was that figure arrived at?
And just exactly which sector of the retail financial services community is predominantly and by a massive margin responsible for consumer detriment? The very one that the FSA all but refuses to make any attempt to regulate. All the data and all the anecdotal evidence is there and has been for years, but the FSA steadfastly ignores it.
From this, we may reasonably deduce, as many have already done, that the solution to the problem of consumer disadvantage lies not in the RDR but in the FSA doing its damned job properly.
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Tony Joannou | 19 Aug 2010 11:35 am
In a strange way it would be better for all consumers if all consumer regulation was self regulating, in the way that it previously used to be. The millions not spent on the fools in charge could be put into a compensation pot that would easily cover the few cases that go wrong from the IFA sector.
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Toddy | 19 Aug 2010 11:37 am
So I suppose, to pay for this shambles, our fees to the FSA will go up even higher to enable them to put IFA's out of business and prevent the ordinary man and women from being able to afford independent advise?
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