The future of the FSA in its current form could be in the balance if the Conservative Party wins the next general election.
In an interview in the Sunday Telegraph, Shadow Chancellor Oliver Letwin attacks the “intrusive regulatory regime” and says if the Tories are elected there would be a change of regime at the FSA.
Internal Conservative documents reportedly say that the FSA is not a democratic body and businesses are wary of criticising its behaviour or aspects of its policy for fear of reprisals.
Letwin points to a survey that the Conservative Party commissioned from the Centre for Policy Studies, which interviewed 200 of the UK's biggest companies, City groups and trade bodies about their dealings with the FSA.
The survey is yet to be published but reports claim it has uncovered widespread dissatisfaction with the way the FSA operates, complaints about the poor quality of its staff and the cost of regulation.
The director general of an investment trade body describes the FSA's management as “completely out of touch”.
A City law firm says that the financial services industry does not have sufficient input into the FSA and a big investment bank says the FSA issues too many consultation papers which add to cost and take an excessive amount of time to complete.
A US investment bank reportedly complains about the 360 per cent increase in the costs of complying with regulation over the past 11 years.
FSA spokesman Rob McIvor says: “It is very telling that none of the comments is attributed. They either show ignorance or a blinkered mentality that refuses to accept the changes we have made to the regulatory structure. We are willing to listen to the industry.”