MM leader: FSA must justify piling on more industry costs
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As Prime Minister David Cameron prepares the country for a raft of savage and painful cost-cutting measures, the FSA has revealed its latest proposals to increase industry costs.
Clearly, Cameron’s age of austerity has yet to reach the FSA’s headquarters as it heaps more costs on an industry already creaking with the demands of the retail distribution review, the Financial Services Compensation Scheme and other regulatory overheads.
Last week’s FSA consultation paper suggests a new ethical code for all sectors, a 30-month limit for new advisers to reach the QCF level four qualification, retaining the training and competence sourcebook that was set to be scrapped and a three-yearly review of examination standards.
The FSA will also be looking at non-RDR areas such as mortgages, equity release and long-term care, with an eye on increasing examination standards.
In March, the FSA revealed a huge leap in the estimated costs of the RDR from £430m to between £605m and £750m in one-off costs, with ongoing cost estimates increasing from £40m to between £170m and £205m.
These new proposals will inevitably increase the industry’s regulatory bill yet again although it is far from clear from the consultation paper that this extra strain on the industry will lead to tangible consumer benefits.
Another concern emanating from last week’s paper has to be the extent to which the FSA appears unconcerned about its regular changes in direction.
Firms were expecting the TC sourcebook to be removed this year as part of a more flexible approach to supervision, in keeping with European regulations, yet it will now be retained.
This revolving agenda from the FSA creates uncertainly and instability within the sector which drives up costs further. It is hard to make long-term plans when the regulatory winds are blowing in so many directions.
It is still unclear what the future holds for the FSA, with George Osborne due to address this issue in next week’s Mansion House address.
If the FSA is retained to supervise conduct of business regulation, there needs to be a far greater focus on ensuring its costs are justified. After all, these costs are passed on to consumers in the end.
As the Government prepares for huge public sector cuts, the regulatory costs inflicted on the industry should not be allowed to continue to rise.
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Readers' comments (4)
Evan Owen | 10 Jun 2010 11:37 am
The problem is that the regulator was having a nice long sleep (see Rip Van Winkle) which has lasted since 1985 until the banks fell over and now its future is uncertain the management are attempting to wake up and justify their expensive existence with yet more expense, their answer to everything is to throw more money at it, money they don't have.
What these people have failed to understand is that some of us know more about what regulation is supposed to do and how to do it effectively at minimal cost than they will ever learn. The only problem is that we shout too loudly when they are still having forty winks or they are afraid of someone showing them up as Mike and I did recently and will do so more often from now on.
WAKE UP!!!
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Julian Stevens | 11 Jun 2010 3:07 pm
Nothing short of a review imposed by central government is going to make the FSA take the blindest bit of notice of anything that the industry says, other than a few relatively trifling token concessions. The FSA is currently accountable to no one and that has to be the top priority for change.
Keep writing to your MP. If enough of us write often enough to enough MP's, eventually a few of them will take notice and take action. It's all we can do, because nobody else (in any position of influence) is listening.
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Tim Harvey | 11 Jun 2010 3:11 pm
I can understand that some parts of the FS industry may need more detailed and hence costly regulation but I would love to see exactly why IFAs pay so much when it seems to me that on a risk based analysis we dont need much regulation. Down to some 2% of complaints to Ombudman and less than 50% of those upheld. Please can someone explain.
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Patrick Schan | 11 Jun 2010 10:32 pm
I agree with Evan Owen. All the FA ever do is try to justify their existence with pathetic initiatives that do nothing but waste everyones time. Of course the politicians fall for it because they don't understand the industry and they don't care anyway.
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