The FSA has warned the financial services industry it will have to bear the brunt of higher regulatory costs as the Financial Conduct Authority pursues a more interventionist style.
At an FSA conference on the FCA this week, FSA chief executive Hector Sants said the early intervention approach proposed for the FCA offers greater prospects of success but comes with “the certainty of extra cost”.
FSA interim managing director of the conduct business unit Margaret Cole told conference delegates: “We are trying to raise a mature debate on the extent of what the regulator can and should do and what the costs of that might be.
“If society’s expectation is that we are going to be a much more interventionist regulator, taking more risk and bringing more enforcement action, then inevitably that comes at a cost. We have to make sure as a regulator we give value for money, we have to manage our budget carefully and make sure there are not inefficiencies and we always have to be alive to that.”
Philip J Milton & Company managing director Philip Milton says: “Firms are already paying enough and I do not think the FSA will achieve what it wants even with more money. It will end up increasing the cost to the customer as well.”
Tenet distribution and development director Keith Richards says: “Adding even more cost at a time when both the industry and the country are economically challenged would seem like the wrong solution to the problem. One would hope that after two decades of regulation the effect should have resulted in reduced requirements, not increased. This latest statement from the FSA is further evidence of a single focus from purely a regulatory perspective and of the regulator going further in the wrong direction.”
The FSA announced in March its budget was rising by 10 per cent from £454.7m in 2010/11 to £500.5m in 2011/12, including a £10.9m cost of moving to the new regulatory structure.