A report on the UK's most powerful regulators concludes that the FSA needs to be monitored by the National Audit Office.
The House of Lords' select committee on the constitution recommends that the FSA's cost-effectiveness and budgetary control are monitored by the NAO in a report entitled, The Regulatory State: Ensuring its Accountability.
The report includes evidence from the Equitable Life Members Action Group, in light of the Penrose report, calling for the NAO to undertake efficiency studies of the FSA.
A large number of IFAs interviewed by the select committee felt the FSA's bureaucracy is excessive and described the regulator as high-handed and insufficiently accountable.
Evidence from Aifa chairman and Conservative MP John Gummer highlighted the burden of regulation on small IFAs. He said that, case by case, FSA consultations are proportionate but put together they are disproportionate, a problem made worse by the length and impenetrability of documents.
The select committee says it paid particular attention to complaints from advisers about consultation on non-essential issues.
The report concludes that complaints about the retrospective application of rules raise concerns about inequitable treatment and the cost of PI insurance.
It recommends that a dedicated – preferably joint – Parliamentary committee should be established to scrutinise regulators. It wants Parliamentary scrutiny to be focused on regulators' annual reports and published regulatory impact assessments.
Committee chairman and Tory peer Lord Norton of Louth says: “The activity of regulators has to be checked by more effective and systematic accountability. This should be undertaken by Parliament but citizens should also have more opportunities to challenge regulators, both through public meetings and a more accessible appeals system.”
Shadow Trade & Industry Secretary Stephen O'Brien says: “This report is proof of the culture of regulatory creep under Labour. I want to arrest and reverse the flow, as well as the stock of regulations, particularly from the EU.”