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Tenet wants cost-benefit review of FSA’s budget

Tenet is calling on the Government to conduct a new cost- benefit review of the FSA’s 2012/13 budget, describing the 16 per cent rise as “uncontrolled regulatory costs”.

In March, the FSA confirmed that its budget is increasing by 16 per cent from £500.5m in 2011/12 to £578.4m in 2012/13. This followed a 10 per cent increase from £454.7m in 2010/11.

The FSA also confirmed the Money Advice Service’s budget for 2012/13 doubled to £86.8m, up from £43.7m in 2011/12. The FSA said this reflects the Government’s decision to move debt advice to the MAS.

In 2010/11, the FSA became subject to National Audit Office audits but Tenet distribution and development director Keith Richards says the regulator’s spiraling costs justify further Government scrutiny.

Richards (pictured) says: “At a time when the Government is preaching austerity and implementing major spending cuts, the FSA seems entirely exempt.

While the industry has to foot the bill, it is the consumer who ultimately pays as these uncontrolled regulatory costs will, of course, be passed on and affect the accessibility of advice.”

In February, the Government announced that from 2013 the Financial Conduct Authority’s budget will be scrutinised by the National Audit Office.

Both the FCA and the Prudential Regulation Authority will also be accountable to the public accounts committee, which assesses accounts based on value-for-money criteria.

PMI Independent Financial Advisers director John Stewart says: “Pretty much every adviser in the industry would support a review of the FSA’s costs. It is about time the regulator is held fully accountable for its soaring budget and proper scrutiny of its costs is applied.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Keith is absolutely correct. The FSA’s costs should be the subject of scrutiny by the NAO now, there i son need to wait until the FCA comes into being. And, as suggested by AIFA, any increases should be capped. Ever increasing regulatory costs are a drain on the whole Financial Services sector, especially the advisory profession.
    Regulation has ceased to be a positive influence for consumers and has, instead, become a major factor in encouraging the growth of the savings gap.

  2. Thank the Lord, about time somebody took a look at the costs!

  3. The PR people will be working overtime, thinking up ridiculous excuses for profligate expenditure.

  4. Couldnt agree more but even if they rightfully get hauled over the coals and forced to reduce it, they will simply look deeper on inspection visits and fine some poor git for having the illustration in th ewrong part of the file or a file note with a spelling mistake and so get more money that way. Nice work if you can get it.

  5. Firstly, the government has already declared that the FCA, like the FSA before it, will be accountable only to its own board. So, any positive action from the government in response to this campaign would have to be preceded by a formal retraction of that earlier declaration ~ wouldn’t it? How confident of that can Tenet be? Is that part of its strategy? If not, then this is nothing but a bit more shouting in the woods and the firing off of a few corks into the air ~ like AIFA used to do. Remember?

    Secondly, no review of the FSA’s overall operating budget could take place without an investigation into the constituent elements of that budget ~ how could it, unless the government were to issue a blanket directive instructing the FSA to cut by 20% its burden on the industry? But then the government claims that the FSA is independent ot it [government]. So how could it issue such a directive without admitting that well, really, the FSA isn’t independent at all? It would mean owning up to another Great Lie, so often perpetuated by the likes of Mark Hoban. Has Tenet considered this?

    Were the government to issue such a directive in response to this campaign, it would mean that the first brick in the FSA’s high wall of unaccountability would have been removed ~ as it darned well should be.

    Further calls would swiftly follow for a review of why the FSA needs to employ 4,000 people. Why does it need to house them all in one of the most expensive office blocks in the entire country? How can the FSA possibly justify spending £1m on stationery in a year? STATIONERY for Christ’s sake!! Or its £567,000 hospitality budget? Or tens of thousands of pounds on first class, all-expenses-paid overseas jollies for the likes of Hector Sants, Adair Turner and Margaret Cole? Or the routine breaching of budget caps for overnight accommodation? Or its £20m+ bonus pot (bonuses for what, we’d all like to know)? Or Hector Sants’ £132,000 of motoring expenses? What does he drive ~ a Maybach? Or Clive Briault’s £612,000 golden parachute (for gross dereliction of duty, remember). These are all profigacies of the grossest kind.

    And what about the FSA’s criminally skewed Cost:Benefit Analysis for its RDR? Make up a figure that doesn’t sound too bad, make a lot of noise about all the consumer benefits that’ll result, get the whole thing underway and from that point on bolt on new bits ad infinitum. If anyone complains, just say, well, the train’s out of the station now so we’re not going to try to reverse it back in just because we got our initial cost estimates a bit wide of the mark. So stop whingeing and just get with the programme or ship out. Tyranny.

    As always, it comes back to the issue of ACCOUNTABILITY or, more precisely, the total lack of accountability on the part of the FSA, which has become a cancer eating away at the industry. You can’t, as Tenet seems to be trying to do, just make a bit of noise in isolation about the FSA’s freedom to ratchet up by any amount it pleases its overall operating budget ~ it goes much wider and deeper than that. It goes, in fact, to the item of legislation that nobody seems to want to talk about ~ not Tenet, not AIFA, not the TSC or anyone else. The Statutory Code of Practice For Regulators, to which the FSA in a letter to my MP claimed to adhere but which, as we all know, it totally ignores. The FSA lied to my MP. The foreward to the Code, written by Pat McFadden (now a member of the TSC) states:-

    The Regulators’ Compliance Code is a central part of the Government’s better regulation agenda. Its aim is to embed a risk-based, proportionate and targeted approach to regulatory inspection and enforcement among the regulators it applies to.

    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.

    Apart from anything else, how can the Code constitute “a central part of the government’s better regulation agenda” when it [the government] has declared that the FCA, like the FSA before it, will have a free hand to do whatever the hell it wants without accountability to anyone other than its own board?

    And in just what ways, might we ask, has the FSA become “more efficient and effective” in its work?

    Just what “significant benefits to low risk and compliant businesses through better-focused inspection activity, increased use of advice for businesses, and lower compliance costs” has the FSA delivered? None at all ~ instead, it’s adopted a strategy of micro-regulation according to the lowest common denominator, on the assumption that the small proportion of all not so good transactions that it sees are representative of the entire IFA sector.

    I dunno ~ the lunatics really are running the asylum and I have to say I’m a bit sceptical about this latest bit of self publicising on the part of Tenet. The FSA’s overall operating budget is just one issue in a very much wider ranging war on a tilted battlefield.

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