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FCA’s Project Innovate to cost £1m a year

The FCA’s project to help start-ups and established businesses launch innovative ideas will cost almost £1m a year, Money Marketing can reveal.

Project Innovate launched last month and offers qualifying firms help to understand the regulatory framework and how it applies, as well as support for up to a year after authorisation for newly-regulated businesses.

A Freedom of Information request, submitted by Money Marketing, shows the total set-up cost for the project was £182,534, while the expected ongoing costs are £498,146 for every six months.

The request also reveals there are seven staff members in the Project Innovate team, six of whom have been seconded internally and one of whom is a consultant.

A FCA spokesman says the project is in a pilot phase but is intended to be permanent.

The spokesman says: “Project Innovate and the innovation hub are part of our commitment to support innovation by opening doors to those – regulated and not – who come with fresh ideas about how to deliver financial services.

“This work levels the playing field by giving all firms eager to innovate access to our expertise so that the process of joining the financial markets or introducing new products does not seem so daunting.”

In a recent speech, FCA chief executive Martin Wheatley denied the project gives unauthorised firms “special treatment” and is subsidised by regulated businesses.

He said: “The fear is rooted in misconceptions about this work. For a start, regulated firms are in scope. As well as this, the largest firms already have direct access to the regulator through their supervisors.

”What we are doing is going some way to redressing that imbalance. I certainly don’t see that as unfair.”

Penguin Wealth certified financial planner Craig Palfrey says: “Offering support to firms trying to be innovative is a great idea, but ideally this should come from the existing regulatory budget rather than raising more money.”

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Comments

There are 15 comments at the moment, we would love to hear your opinion too.

  1. Having made a good job of culling the industry, it now has to show ways to replenish to justify a continued existence…

  2. Inviting the fox into the henhouse…..

  3. Understand the regulatory framework hmmmm.

    One of the big issues with the way the FCA communicates what is wants is it will give a principle such as “affordable for the customer” fair enough but if a lender interprets the principle differently from the FCA they will fine the lender so the lender interprets the rule as carefully as possible because they don’t want a fine.

    Even if you spend a million quid on a forum that lays out the principles without a clear rule not a principle which is open to interpretation regulation wont work properly.

    Even the idea of fines is counter productive if you consistently fine an organisation it will either pull out of that market or put its prices up to pay for the fines. So the end user will be left with reduced choice for the supply of the service or there will be no service available and the costs to the end user if the service is still available will ultimately go up. Which is exactly the opposite of what the regulation is trying to achieve.

  4. It’s Other Peoples Money so it’s very easy to spend.

    Project innovate is the FCA’s admission that its rules and principles are impossible to understand and comply with in a way that gives a commercial business the certainty that they are doing the right thing.

    Project innovate should be closed immediately and the £1 budget spent on reducing the rule book to a level at which a normal educated person can understand without the need to employ expensive compliance consultants.

    When people understand the rules and can make decisions in the knowledge of their new venture being fully compliant then innovation will naturally follow.

  5. Why does the FCA not sort out it’s own shortcomings, such as producing an intelligible hand book, before it spend more money, which it can only recover by increasing the fees of those in “scope”, whatever that means.

  6. Where does the article state that the cost is not coming from the exisiting budget?

  7. Matthew – as far as I can recall pretty much all your comments on this site are in defence of the FCA. You`re not Martin Wheatley are you ?

  8. What is a budget Matthew? A calculation/estimate/projection of anticipated income/expenditure for a business (in its simplest format).

    Therefore, if this project does not exist, the budgeted cost for the FCA correspondingly reduces by £1 million does it not? So it is an additional cost for which we will be charged. Unless you are suggesting that the regulatory budget is for more than required to deliver its service, in which case we would be getting over-charged, which we know is not the case, as the FCA had no funds left within their recent budgets to repay the advisers the money that was over-charged to their fee-band in previous years.

  9. Irrespective of weather this funding for “team innovate” (or twat nav as I would like to call it) is direct, indirect, fines or from existing budget, the big question still remains

    GET THE RULE BOOK SORTED YOU MUMPTIES !!!!

    You wont need to baby walk or navigate people round it, through it, over it or under it.

    Either way you cut it you (FCA) continue to waste my clients money, in the main, to justify their own existence

  10. @ Mathew Like the FCA said regarding the removal of the long-stop – “Under FSMA it was not that the long stop was removed as such, but as it was not expressly mentioned by parliament, it was not brought through under the new rules”. So to answer your question in very simple terms: As Martin Wheatley did not mention anything about it being paid out of existing income, you can rest assured it will be added to the FCA annual budget. Still its only another million quid

  11. I was only asking for the detail behind the following statement at the end of the article…

    Penguin Wealth certified financial planner Craig Palfrey says: “Offering support to firms trying to be innovative is a great idea, but ideally this should come from the existing regulatory budget rather than raising more money.”

    My apologies if I dont always default to the biting, dismissive negativity that prevails in these comment sections.

  12. This is not about biting negativity. This is a simple case of the regulator admitting that no ordinary mortal can possibly understand the rules. Since they seem to know that this is a problem, some people in the business make the not unreasonable point that perhaps they should address it.

    If this group of seven is really a compliance consultancy, then it should clearly charge if it renders services to firms who are not regulated and therefore not contributing to FCA costs.

  13. Well said Graeme !!

  14. @ Marty – The FSA said they were going to draft the ruels as per common law and then didn’t, which is why I refer to them as a bunch of shysters (as they no longer exist so they tell us, I assume they can’t take umbidge?)

    See below re why some of us are still arguing this was done by a slight of hand and their continued refusal to have any meaningful discussion is disgusting.

    CP 33 – Consumer complaints and the new single ombudsman scheme [1999] http://www.fsa.gov.uk/pubs/cp/CP33.pdf it clearly states 6.26 ” For the purposes of the new Scheme, we propose to apply the time limits enshrined in English law relating to the limitation of actions.”

    and

    CP 49 – Complaints handling arrangements [2000] http://www.fsa.gov.uk/pubs/cp/cp49.pdf “met with general approval, as did the proposal to mirror the English law relating to the limitation of actions and these are reflected in the draft rules.

    So the longstop enshrined in English Law WAS in the draft rules and without consultation or explanation was dropped from the final rules. For me that smacks of dishonesty. The question is who gained by the dishonest and where are the FSA minutes of the discussion of removal between draft rules and final rules.

    I suspect Adam Samuel will post on here in riposte, but I would call on him to show us how it moved from the draft to the final rules as I can’t find anything public which explains it.

  15. Fox in the hen house?

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