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FSA budget to increase by 15%

The FSA has confirmed that overall regulatory funding will rise 15.6 per cent over the next year from £500.5m in 2011/12 to £578.4m in 2012/13.

The FSA’s Business Plan, published today, confirms the regulator’s 2012/13 budget, which was first proposed in its consultation paper on fees and levies in February.

It shows of the £578.4m total budget, £32.5m is going towards the regulator’s switch to the incoming twin peaks regulatory structure. Last year, that figure was £10.9m, an increase of 198 per cent.

This means the operating budget for 2012/13 will be £543.5m.

The business plan says most of the increase will be carried by large firms which will face more intensive supervision in the regulator’s new judgement-based approach to regulation. It adds that the minimum fee of £1,000 paid by 42 per cent of regulated firms will reman the same for 2012/13.

Last year, the Budget rose by 10 per cent from £454.7m in 2010/11 to £500.5m for 2011/12.

In his forward to the plan, outgoing FSA chief executive Hector Sants says: “We recognise that the average increase in the FSA’s fees for the last five years has been around 13 per cent. This rate of growth cannot continue indefinitely, particularly when the financial services industry continues to be under pressure and so we would like to emphasise our commitment to ensuring direct costs of regulation are proportionate.”

Part of the rise is also down to increases in staff pay averaging 3.5 per cent.


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There are 19 comments at the moment, we would love to hear your opinion too.

  1. This was announced last month. Why is this being re-reported. Slow news day?

  2. At least Dick Turpin had the decency to wear a mask !!

    Come on the big boys in the industry; stop cosing up and have the guts to refuse to pay – where would that leave this gravy train?

  3. The FSA is recession proof it seems….
    What other business or Goverment Department would get away with this burgening budget……

    The FSA is an absolute disgrace a costly failure …

  4. well isnt it just typical that amidst recession, public sector cuts and massive UK job losses the good old regulator continues to rack up its own fees and budget and staff getting a 3-5% pay rise!
    what planet are they living on?reward for failure once more
    from the £500m of compensation scheme payouts for the 10 worst company failures, only £28m was form IFA firms yet we are all charged for all of it.why doesnt the FSA regulate the product providers more?and why cant they do it more efficiently?the reports about the FSA’s expenditure has been quite incredible-its an absolute scandal

  5. “Part of the rise is also down to increases in staff pay averaging 3.5 per cent”.

    And no doubt garden leave payments for resigned staff.

    Alan Lakey has estimated the 6month Sants alone will cost as £413,000 – using last years income with a 4.3% uplift as between 2010-11.

  6. Oh!Joy, amid all the gloom, whilst we are in the middle of a potential 7 year retrenchment of our finances, with a burgeoning unemployment problem record deficit levels it is so heartening to see a business buck the trend. One can only applaud a business that is seeking to grow it’s way out of trouble producing outstanding returns by growing revenue an eye popping 13% a year for the last 5 years. Brilliant. I wish they would share some of the secrets of their success………….

  7. This is frankly appalling!

  8. I wish I could award myself a 3.5% pay rise

    The failed FSA should be ordered to save, not just add arbitrary increases in costs

    The cost of regulation has just rocketed for me over the past few years and this cash cow is running on empty its just outrageous to keep screwing us into the ground.

  9. this is no surprise and remember next year will be even worse why you said well take the overall budget devided by amount of firms and since it looks like the amount of firms post RDR is going to drop 15-20% the rest will have to pick up the slack they should flot the FSA on the stockmarket being a company with a unlimited amount of funds and if you run short just bring in a addtional charge mid year

  10. Where the heck do these people come from.
    13% increase when the industry is dying through the FSA and a further levy potentially for the FSCS because of a spread betting firm collapsing. I bet everybody who make bets wish they had cover if they lost money through gambling.

  11. I wonder how healthy these blog’s really are.

    It is a necessity in order to keep trading to keep positive, otherwise one wouldn’t survive! Indeed your clients require this of you. But I am constantly sitting at my desk with these negative emails popping up. Maybe 20 a day! I stay with these negative people to keep abreast of the tiny bits of positive information they do provide. I feel the financial press could do more to make our life easier, instead they drag up every piece of negative information they can get there hands on, and blow it up out of proportion! Kind of light the blue touch paper and stand well back. I am convinced they get a kick out of our responses! Lets have more positive reporting; even the most positive IFA must be suffering from this constant barrage of negative information!

    Re: the FSA increase, are we really surprised? Like all of these government departments they have one rule for others and one rule for themselves, how can you have any respect for this? But step out of line and they will hit you like a ton of bricks.

    I have had over 25 years in this industry and I despise them now. Totally no respect, but I stay on side because I am not stupid, any fool can get a good whacking! Not many of my clients have had a 3.5% pay rise in the last three years! “we are all in this together” I think not!

  12. All bureaucrats have success when it comes to spending other [eoples money.

    In this regard the FSA is first rate. However, when you plot a graph comparing fee income (and expenditure) with worthwhile results you get the kind of chart more suggestive of Lehman Bros shareprice in 2008.

    2010-11 464.2m
    2009-10 435.5m
    2008-09 324.4m
    2007-08 303.3m
    2006-07 282.1m
    2005-06 265.1m
    2004-05 247.7m
    2003-04 236.4m
    2002-03 209.4m
    2001-02 120.2m
    2000-01 82.8m
    1999-00 67.6m
    1998-99 58.3m
    1997-98 22.5m

  13. So, what is to be done about this.

    Nothing! Suffer it !

    The CEOs of major networks and providers will do nothing to upset the regulator in case they end up being “visited / inspected ” by the Financial Stasi Authority goons who are bound to find some breaches of rules, occasioning a fine to boost the coffers.

    Where will all end I ask?

    Only the great architect of the universe could possible answer that question.

    Write to your MP, write to the TSC, write to the Chancellor and Complain, Complain, Complain, after all there are thousands of individual advisers, if they got only 20% sending in a complain someone must take notice.

    I am writing, all the rest of you need to get on with it.

  14. We`re in a “Kings New Clothes” scenario now. We are all scared of pointing out the obvious in case we get ridiculed or investigated by our regulator. We need an innocent to come along and say ” Why are their costs increasing when everybody else`s are being cut? Is there anyone out there? George? David? Please!!!

  15. Quite simply staggering and this kind of lunacy invades every corner of british industry!! No wonder the UK and Europe are in the state they are. How will UK PLC ever compete with the emerging economies with incompetent bureacracy and regulatory cost on this scale? And i’m sure the new ‘twin peaks’ regulatory structure will be a huge success, just like all the structures which came (and rapidly went) before it!

  16. I think the last and only major company that stood up to the FSA was L&G in 2005 following a £1m endowment selling fine. The Financial Services and Markets Tribunal found that the FSA had failed to prove that there had been widespread mis-selling and criticised its decision-making processes. The FSA have not really had it in for L&G since then…shurely they would not be so mean.

  17. Maybe, just maybe the costs of regulation are increasing due to the industry we work in. Remenber all these blogs when we complain that the regulator failed to stop or even spot this or that, when we claim that the regulator should be spending more time focusing on large scale organisation such as the banks, breaking up the regulator to allow focus on conduct and prudential issues to avoid failure. Maybe it just costs more to do this?

  18. Larry Lumbledown 23rd March 2012 at 8:48 am

    OMG! They’re building castles in the air at OUR and OUR CLIENTS’ expense. Shame on them. Shame on them.

  19. And just what notice was taken by the FSA of any of the submissions in response to its consultation issued in February? How many of them said yes, fine, we fully support this increase, go ahead, we’re happy to pay even more, the FSA does a great job but we fully understand that it needs even more industry money to do it even better?

    And will any of those responses ever be published for all to see and to debate? So much for the FSA’s claims on its website to being “an open and transparent regulator”. It’s just a lie.

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