View more on these topics

FSA cost of RDR set to pass £3m

The FSA has spent £2.95m so far on development of the retail distribution review.

The figure has been revealed in response to a Freedom of Information request by Highclere Financial Services partner Alan Lakey, who is also director of Adviser Alliance.

The regulator’s costs comprise £2,061,000 on internal staff working on the RDR, £249,000 on project management and £643,000 on consultants and agencies.

Lakey says: “The counter is ticking as we speak. Add to this the £500m it will eventually cost with one-off and annual accrued costs and it can be seen as the biggest waste of funds since the Dome.”

An FSA spokeswoman says: “These costs have been spread over almost four years and include policy development from initial discussions, through to industry consultation, and then publication of final rules.

“Levels of consumer detriment in the retail investment market are estimated at £223m per year. The RDR in general and adviser-charging specifically will go some way to correcting these failures before they get a chance to impact the market.”

In March, the FSA’s estimated incremental compliance costs for the first five years of the RDR skyrocketed to between £1.4bn and £1.7bn from its previous estimate of £600m. Estimated one-off costs rose from £430m to £605m-£750m. Its estimate of ongoing costs jumped from £40m to between £170m and £205m.


Axe lifetime allowance

The Government has said that it needs to maintain a certain tax take in respect of pension contributions. This is entirely reasonable. The previous admin-istration was forever making changes. On A-Day in April 2006, it used the Orwellian nomenclature of pension simplification to introduce mind-bogglingly complex rules that had never before existed such as: Pension […]

Turnaround specialist increases stake in F&C

Turnaround specialist Edward Bramson has doubled his stake in F&C Asset Management to take more than 9 per cent of the business. Yesterday Sherbourne, Bramson’s investment company, took a 5.2 per cent or £15.59m stake in F&C but this morning the firm almost doubled that with the acquisition of another £14.48m shares, taking its total […]

Protecting long-term savings from short-term policy

By Jamie Clark, Business Development Manager The pensions revolution is almost upon us. As with any revolution, there will be winners and losers. The winners in this case could presumably be the politicians that orchestrated pensions freedom and choice just before the general election. As for the losers, there may be many thousands of people […]


News and expert analysis straight to your inbox

Sign up


There are 17 comments at the moment, we would love to hear your opinion too.

  1. “Levels of consumer detriment in the retail investment market are estimated at £223m per year. The RDR in general and adviser-charging specifically will go some way to correcting these failures before they get a chance to impact the market.”
    Prove it.

  2. Here we go again the FSA wasting our money on what really is a complete load of rubbish. It is time the government stepped in and stopped those idiots in Canary Wharf from screwing up the UK Finace industry and having a total disregard to using our money wisely

  3. The FSA spokeswoman says “These costs have been spread over almost four years”. What difference does that make?
    It’s actually worse than the biggest waste of money since the dome, as it is a huge sum to pay for something that will be to the detriment of public interest and for the loss of thousands of good advisers and, in many cases, the tax they pay, as a consequence.

  4. “Levels of consumer detriment in the retail investment market are estimated at £223m per year”

    I must admit I have not seen this comment before — but it is a bit difficult to plough through all of the comment and literature pouring out of the ivory towers.
    However, if the levels of detriment are at £223m per year, is this not a full admission that the FSA regulatory model is broken and should be totally scrapped ?
    As far as comments comparing the cost with the Dome – at least we have the Dome – after all the money that is spent by the FSA what do we have – lots of hot air and a few (very expensive) works of art which will eventually be sold for pennies on Ebay !!

  5. It was hoped that a new incoming Government would have put a stop to this beurocratic lunacy that is the FSA. It appears that is not to be the case with Hector back at the wheel! It beggars belief what these morons are able to do in the name of protecting the public – show me how they have protected anybody since they were inacted apart from their own high salkaries and bonuses of course.

  6. waste if monet as is the FSA

    Better to spend it compensating consumers. sine 20004/5 FSA, FSCS and FOS costs £3 Billion FSCS compensation payouts for the same period only £2 Billion and a fair proportion of that was due to the banking crisis.

    The FSA is not cost effective, period.

  7. Of course this takes no account of the loss in value of an IFA business practice induced by a forced sale with the uncertainty of the continued trail fee income.

  8. Notable by its absence from the response from the FSA spokesperson is any mention of the massively rigged Cost:Benefit Analysis on which the RDR has been launched. So what’s a jump from £600m to £1,400m (and maybe more) in the grand scheme of things? As far as the FSA is concerned, who cares? It’s not their money after all and to back down now would be to “lose face” and we can’t have that, can we, what with the name of the FSA already being about as deep in the mud as it’s possible to be.

    And then there’s the issue of levels of consumer detriment in the retail investment market being estimated at £223m per year. Oh yeah ~ by whom and by what methodology was that figure arrived at?

    And just exactly which sector of the retail financial services community is predominantly and by a massive margin responsible for consumer detriment? The very one that the FSA all but refuses to make any attempt to regulate. All the data and all the anecdotal evidence is there and has been for years, but the FSA steadfastly ignores it.

    From this, we may reasonably deduce, as many have already done, that the solution to the problem of consumer disadvantage lies not in the RDR but in the FSA doing its damned job properly.

  9. In a strange way it would be better for all consumers if all consumer regulation was self regulating, in the way that it previously used to be. The millions not spent on the fools in charge could be put into a compensation pot that would easily cover the few cases that go wrong from the IFA sector.

  10. So I suppose, to pay for this shambles, our fees to the FSA will go up even higher to enable them to put IFA’s out of business and prevent the ordinary man and women from being able to afford independent advise?

  11. Come on everyone I am sure that there is nothing better the industry can spend tax payers money on. Anybody would think we are in a recession!

    Get me out of this forsaken country – regulation is strangling progress. Who will end up regulating the regulators regulator?

  12. You still do’t get it, do you! The prime directive of the FSA is to get rid of the small IFA which it regards as an inconvenience and this will leave it dealing only with those paragons of virtue, the banks.
    I still don’t understand what is wrong with commission. We do all the work and if the client doesn’t like it, we get nothing. That’s quite an incentive for us to do a proper job.
    2012 – I’m outahere!

  13. What’s new? its just a wate of ultimatley clients money. FSA just keeping jobs going and we complained about bank bonus.

  14. Scarlet Pimpernel 19th August 2010 at 2:59 pm

    Hector Sants – Will always have that FIXED GRIN fixed on his face, as he thinks, how daft we all are; i.e. the Government, the Insurance Companies, Intermediaries, and Brokers; are for letting; him & the FSA continue wasting Billions of pounds of our money.
    He is laughing all the way to the
    So next time you see is Grin; you know what he is thinking!

  15. What a costly mess.

    £3 million and counting.

  16. Neil F Liversidge 6th September 2010 at 3:36 pm

    All comments valid folks, but please write them to your MPs. Only the politicians can bring about a change.

  17. Makes the Scottish Parliament look look a bargain.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm