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Advisers welcome NAO scrutiny of FCA costs

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Advisers have welcomed news that the National Audit Office is to investigate whether the FCA and Prudential Regulation Authority provide value for money and are proportionate in their regulation. 

The new ‘twin peaks’ regulatory structure, introduced in April by the Financial Services Act 2012, requires an annual NAO review of the regulators.

However, this separate investigation has been requested by the NAO’s comptroller and auditor general. The resulting report is expected in 2014 and is likely to trigger parliamentary hearings by the powerful public accounts committee.

An NAO spokeswoman says: “This study will examine the regulatory framework and approach, providing an early assessment on whether regulation is likely to be delivered in a targeted, proportionate, consistent and transparent way, and whether the bodies are working together effectively.

“It will also consider the impact of the changes, both in terms of the additional costs of the regulators and, where possible, through estimates of the additional costs and benefits to regulated firms and consumers.”

During the legislative process that replaced the FSA with the PRA and the FCA, MPs and peers raised concerns about the potential for increased regulatory costs and double charging.

Lansons regulatory consulting director Richard Hobbs says: “The NAO will take a short ruler to the regulators and they could look very expensive because they tend to pay staff more than average civil servants. That plays right into concerns from IFAs about high regulatory fees.”

Apfa director general Chris Hannant says: “It is about time we saw this kind of scrutiny. It is long overdue. Everyone is worried about fees and the FCA is not as efficient as it could be.”

Clear Financial Advice director Howard Bullock says: “If fees are going to rise, as they have over the past few years, you have to get value for money.”

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  1. I’ll welcome this investigation if and when anything meaningful comes of it, though it’s (cautiously) heartening to note reference to such terms as targeted, proportionate, consistent and transparent. Perhaps at long, long last we may see the regulator called to account for its wilful disregard for these fundamental precepts of the Statutory Code of Practice for Regulators.

    It’s also interesting to see reference to the public accounts committee which, one would hope, does actually turn out to be more powerful than the largely powerLESS TSC.

    The FSA does have too much power and too little accountability. It also has an open mandate to set its own agenda without reference to any outside body and to charge the industry a king’s ransom every year. A 20% cut to its operating budget followed by a 5 year freeze, with subsequent increases pegged to inflation would be a good place to start.

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