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FSA: New regulator’s interventionist approach will increase costs

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.

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. My early prediction is that this will be the most commented on article of the week. Let the count begin….

  2. “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”
    Then society should pay for that cost.Furthermore the FCA should be under much more scrutiny and accountability as to where all those millions are being swallowed up.
    The current model is untenable.
    If the situation is not changed then we will simply exist to feed the insatiable beast the regulator has become.

  3. Not a hope of us absorbing a brass farthing of it. Our charges were already going to rise very significantly as RDR approaches, every single penny of increased regulatory cost will be billed to clients, along with a clear explanation of how those costs have arisen. They can then decide whether this represents value for money to them – nowt to do with us I’m afraid. If they don’t like it, they need to tell the FSA not me.

  4. Peter Heffernan 30th June 2011 at 3:55 pm

    “…..we have to manage our budget carefully…” Well you could start by cutting out all staff do’s, the £247,000 that you spent on your Christmas party, the thousands you spend on “works of art” the top boss’ overspending and charging of hotel rooms, the artist in residence(if he’s still around) and of course cut some of the 300 emploees who earn over £100,000p.a. I really could go on but I fear its just a total waste of time, bit like your comments Cole.

  5. What is a black hole my Lord?

  6. “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.”

    Read it and weep.

  7. Another Pissed Off IFA 1st July 2011 at 12:59 pm

    This additional costs are not going to be paid for by the financial services industry but CLIENTS.

    When will the FSA understand that all of the cost of regulation falls upon the tax payer? They are continually adding cost to clients. When will it end?

    The FSA does not seem to understand that companies do not pay taxes, their customers do.

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