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Cost of scrapping the FSA jumps 75% to £44m

FSA-door-700x450.jpg

The total cost of scrapping the FSA and replacing it with the Financial Conduct Authority has hit almost £44m, up 75 per cent from its top estimate of £25m.

The regulator has today published its annual report for 2012/13, reflecting on the final year of the FSA.

It reveals the industry incurred costs of £31.6m in 2012/13 to pay for the cost of abolishing the FSA as part of the regulatory restructure to make way for the FCA and Prudential Regulation Authority.

This is on top of £10.9m in regulatory reform costs in 2011/12 and £1.4m in 2010/11.

The FCA says to date there is an underspend on the regulatory reform budget of £2.4m, which will be used to reduce fees for 2013/14. But it says the industry will have to pay another £2.6m towards the regulatory restructure over the next year.

In its business plan in March 2011, the FSA estimated the cost of creating the FCA would be between £15m and £25m, and the cost of creating the PRA would be between £75m and £150m.

At the time, the FSA said: “Throughout the process, the FSA will take care to minimise the impact of the cost of regulatory reform on firms.”

Advisers in the A13 fee block have seen a 16 per cent increase in regulatory fees this year, from £32.8m in 2012/13 to £38.1m.

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Comments

There are 27 comments at the moment, we would love to hear your opinion too.

  1. Not surprising really. The only thing Government does well is waste our money.

    The inefficiencies and lack of personal responsibility make me weep.

  2. How can this be allowed that they state a cost at the outset (like the cost of RDR) only to find when implemented the cost has increased dramatically – is it because it is other peoples money that is picking up the tab?

    Lets anticipate that Wheatleys pay package is £650K and pay him 75% less at the end of the year – do you think he would think that was fair?

  3. Derek Bradley ceo Panacea Adviser 10th July 2013 at 1:24 pm

    Who is responsible for estimating costs at the regulator?

    How can estimates be soooooooo wrong? With so many examples of cost estimates being wide of the mark surely no future regulatory estimates of cost can carry any credibility at all…… ever.

  4. At the time, the FSA said: “Throughout the process, the FSA will take care to minimise the impact of the cost of regulatory reform on firms.”
    yeah right!

  5. What?! The FSA was scapped?!!? I thought it had just changed it’s name!

  6. *hoping that the moderator corrects my spelling mistake, I meant scrapped not scapped of course*

  7. It would be cheaper to give every firm between £50,000 and £1m to invest (dependent on size and need) in stregthening and improving their systems than to waste hundreds of millions on inefficient fat cat regulators. It makes my blood boil hearing of how money is squandered, especially as we have no control over their spending and are still expected to pick up the bill.

  8. Dick Sprinkler 10th July 2013 at 1:45 pm

    Estimated £15-25 mill actual £44 mill where did that nye on £30 mill go much less what sort of estimate in the real world is that far out ? Only in quango land

    I wonder if the bloke who did the initial maths and costings at the FSA was one of those who got a job at one of the ‘big 4’ accountancy firms ? he’ll fit in nicely !

  9. How? Just HOW can it cost so much?

    Makes me sick.

  10. There is nothing like being able to plan ahead and stick to budgets.

    This is typical lets tell them a figure and let them have the truth later! assuming of course that this is the truth.

    Can you imagine the response if you said to theclients “sorry i am having to increase my costs by 75%”

    I assume the people who made the plans are the same ones who picking up nice jobs elsewhere?

  11. Hand up anybody who is surprised.

  12. For a change of name!!!!

    It’s about time this shower of clowns are brought to task.

  13. What an absolute disgrace. Our money squandered and no one cares one iota. FSA/FCA same animal differnt clothing more money for screwing things up. No doubt all staff got redundancy pay and then re employed with bigger income

  14. How much can it cost to delete the letter “S” and replace it with a “C”?

  15. What a shock our regulator cant add up or budget.

  16. Sounds like a case of ‘churning’ to me…….

  17. How bloody pathetic. Here we have an organisation that is supposed to oversee everything financial, but is incapable of getting on top of its own finances. Like so much else during their rather lamentable tenure – ‘do as we say not as we do’.

    Mr Wheatly I do hope you take note – you have promised to do better, although I guess not many of the regulated are holding our breath.

  18. New Rule Of Thumb

    What ever the FCA say something is going to cost, just triple the initial figure to arrive at the final figure.

    It will still probably Be more but at least you will be in the ball park

  19. That is cheap compared to the 1.6 BILLION POUNDS for RDR
    Even as I type this simple fact I find it hard to believe….. The original idea behind RDR was to save 400 million estimated costs for consumers.

  20. Surely this counts as yet another public scandal?

  21. Disgusting overspend again.

  22. Julian Stevens 10th July 2013 at 7:28 pm

    Our expectation is that as regulators integrate the Code’s standards into their regulatory culture and processes, they will become more efficient and effective in their work. They will be able to use their resources in a way that gets the most value out of the effort that they make, whilst delivering significant benefits to low risk and compliant businesses through better-focused inspection activity, increased use of advice for businesses, and lower compliance costs.

    One regulator, though, has a total exemption from the Code, namely total freedom to spend whatever it wants on whatever takes its fancy. And the TSC is either unable or unwilling to do anything about it apart from ask a few pointed questions.

    This should be reported on the 10 o’clock news as yet another scandal on the part of the FSA.

  23. Am I missing something here it all a complete scam. Who is regulating these people

  24. Dick Sprinkler 11th July 2013 at 8:30 am

    The first woeful estimate was £15-25 million – where in any reasonable organisation is it right to estimate ‘give or take’ 10 million quid !!!!

    Regulation needs to be burnt down it really does it is a farce

  25. Totally disenchanted 11th July 2013 at 9:43 am

    Like IPSA the FCA is an unelected, unaccountable quango, behind which governments hide.
    Why are we voting for any political party when they are openly admitting that they are powerless in the face of these greedy, power hungry bureacrats
    I had a letter from an MP the other day asking me to send money to fight scottish independance.
    I suggested that since he is in line for a 10 or 11% pay rise & I, on the other hand, have awarded myself a pay cut, coupled with a 16% rise in rgulatory fees, perhaps he was in a better position than me to make a donation.
    Why should we bother voting for a government which is not as powerful as a quango, over which there is no control?
    Why are these undemocratic quangos running (roughshod over) Britain?

  26. I am staggered at the initial estimate and flummoxed by the latest update! What will happen to me when the final figure eventually lands scares my wife! Nothing short of a national disgrace.

    These people are in the same building, run the same website, wear the same clothes but have changed their logo. What can possibly have cost this much? Their should be an inquiry into this as that money has gone somewhere! TSC where are you?

  27. Where has this money gone? It must be accounted for. ‘Someone’ is taking the proverbial! Where is the TSC?

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