FSA chairman Adair Turner has said the new Consumer Protection and Markets Authority is likely to be fully funded by the industry but the final decision lies with the Treasury.
Speaking at a press conference following the FSA’s annual public meeting last week, Turner said he has not been informed how the body will be funded.
He said: “I cannot see why it would not have the same structure of industry funding as the FSA has, but that is something for the Treasury to decide.
“I would be very surprised if the Chancellor was looking for more opportunities for public expenditure at this time.”
Turner said he always had “a degree of sympathy” for the Conservatives’ approach to regulation but warned that its implementation must be handled carefully. He said: “My own preference would have been to distinguish prudential from conduct more clearly within the FSA, internal twin peaks as it were, and to close the macro-prudential underlap through the creation of the new financial policy committee.
“But that debate is now over – the Government has decided that it wants to achieve the full clarity of structural change. The FSA’s challenge is therefore to implement that structural change – to divide the organisation into its focused successor bodies, building on the fundamentally changed approaches we have already put in place while minimising the risks of disruption which any process of major structural change inevitably entails.”
Turner added that the cre- ation of the CPMA brings a good opportunity to consider the balance of responsibility between consumers and firms and how to enforcement responsibilities will be distributed between the two bodies.
He said: “We have to think through our enforcement capabilities and what the capabilities of each body will be. We must also implement them while keeping the momentum of our enforcement regime up.”
FSA chief executive Hector Sants said the FSA has a “strong pipeline” of criminal cases in progress and it expects to resolve them over the next 12 months.
He added that the FSA will continue to execute its 2010/11 business plan despite the upcoming regulatory changes, which will see the regulator recruit another 460 staff.
He conceded that staff retention and recruitment will be made “more difficult” by the uncertainty of the transition to the new regulatory structure.
He added: “There is also no change to the FSA’s policy age-nda, which includes the RDR and the mortgage market review.”