The cost to providers

Structured product providers are facing additional costs as a result of the FSA’s new guidance.

The FSA’s cost-benefit analysis estimates that the cost for firms to embed TCF principles in their product development, including the ongoing costs for more consumer testing, will be around £40,000 per firm. The regulator says the ongoing cost to firms of structured product stress-testing and modelling will be about £1,200 per product.

For firms that need to imp-rove their governance arrangements to meet the guidance, the one-off cost of reviewing strat-egy is expected to cost £150,000 per firm while the ongoing costs of more senior management reviews of outcomes is estim-ated to be £20,000 per firm.

The FSA estimates the ongoing costs for firms to adapt management information reporting will be £20,000 per firm. Any increased training for distributors is expected to add ongoing costs of £10,000 per firm.