Speaking last week at the FSA’s annual public meeting in London, chief executive Hector Sants told delegates that he regretted the FSA’s “unacceptable” failure to regulate Rock properly before the summer of 2007.
He said the FSA now has measures to try to ensure such mistakes are not repeated but warned that these would come at a cost.
He said: “The programme includes a commitment to have a minimum supervisory resource for all high-impact firms. This will ensure the necessary focus and continuity with these key initiatives.
“It will lead to increased costs and we are thus likely to exceed the levels of expenditure shown in the business plan for 2008/09, which will also have consequences for next year.
Speaking later at a press conference, Sants added: “Firms are likely to see a significant increase in fees in 2009/10 as a result of the action we are taking but we will try to distribute that across the relevant fee blocks to try and ensure that firms are only paying for the services they receive.”
Sants said he believed the Northern Rock debacle had overshadowed a number of achievements the FSA made in the past year in the implementation of Mifid and working towards Solvency II.
He said after the liquidity crisis last summer and capital crisis in the autumn, the FSA now faces the challenges associated with a downturn in the real economy.
He noted that after this, it will need to deal with the “new normal” where firms will have to adapt business models and consumers their spending patterns.
He explained: “I have previously observed that the era of easy money is gone for some and that all of us must take that into account, whether we are managers of financial institutions, borrowers or savers.”