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Aifa wants external body to sign off FSA’s budget

The FSA should have its regulatory budget signed off by an external body, according to the Association of Independent Financial Advisers.

In its formal response to the FSA’s regulatory fees and levies 2009/10 consultation paper, Aifa says the current process is flawed.

Director general Chris Cummings says: “The FSA should not have the power to develop and authorise its own budget. It does not work. The ability to give final approval of its own bud-get should be taken away from the regulator. We are calling for consultation on who should be authorised to give that final sign-off. This would take a lot of problems away from the FSA. It should not be fighting battles it does not need to fight.”

In February, Cummings called for a full review of FSA budget by the National Audit Office.

He slammed the FSA for increasing regulatory fees for all but the smallest IFA firms and warned that medium-sized firms will face fee increases of 90 per cent this year. He has proposed an inflation-linked increase of no more than 3 per cent a year for advice firms.

He says: “It is true that the FSA needs to do more to regulate the banks but it should be the banks themselves that meet this bill.”

Philip J Milton Financial Services managing director Philip Milton says: “An external body is a sensible idea, even if that third party is Government-oriented. I think the final responsibility should lie with the Treasury or the Bank of England.”

An FSA spokesman says: “We will be considering all submissions and our response will be published in a feedback statement next month.”

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