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£13m bill to set up FSA

The Financial Services Authority will cost regulated firms, including IFAs, an extra £13m to set up.

The figure emerged this week as the FSA announced its regulatory plan and budget.

The new regulator is being created from the merger of the self-regulating organisations, including the PIA and Imro.

The £13m extra bill will be paid by a special levy spread over three years from 2000. It will cover transitional costs, including consultancy fees and IT costs.The budget reveals that FSA staff will enjoy bumper pay rises as the regulator hikes its salary bill by 10 per cent to stave off expected departures.

Savings will be made by cutting 150 jobs, reducing staff numbers from around 2,100 to 1,950. But many of the remaining staff can expect salary increases to reflect the 9.6 per cent average rise in wages in the financial services sector.

FSA chairman Howard Davies says the consolidated budget for the combined SROs and the FSA will be £153.9m next year compared with £153.5m this year.

Fees for member firms will continue to be levied by existing regulators until the new Financial Services Act is passed. The FSA has not yet decided how fees will be levied in the future.

Spokesman Peter Parker says: "The basis on which fees will be levied once all the legislation comes into force, probably in the year 2000, will be the subject of consultation."

The formal transfer of staff from the SROs to the FSA has been delayed from April to June because it must wait until the Bank of England Bill becomes law. Key features of the FSA&#39s regulatory proposals include:

Consideration of how to deal with non- priority pension misselling cases amid an increasing clamour from the industry for advice.

The creation of an independent complaints commission to deal with complaints about the FSA.

Drawing up the criteria to identify firms which will be required to reapply for authorisation.


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