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Time taken for FSA to approve firms’ expansion plans continues to rise

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Law firm Reynolds Porter Chamberlain has attacked the FSA’s “laborious” and “intrusive” approach to the authorisation of financial services firms’ expansion plans after the average regulatory approval period increased to 97 days.

The figure, which covers the 12 months to June 30, 2011, represents a 10 per cent increase on the previous year’s average of 88 days.

RPC says the average number of days taken for FSA approval has more than trebled since 2008, when it stood at just 25 days.

Firms need to vary their permissions with the regulator when starting a new line of business, undertaking a new regulated activity or extending a business line into a new product or to a new class of customer.

Regulatory partner Jonathan Davies says: “The FSA’s remit is to ensure that a company’s business plan will not pose a significant threat to the stability of the markets or put consumers at risk.

“However, these new figures seem to show that the FSA’s checking process is becoming more laborious than ever before.

“The financial services sector is a key employer and vital generator of tax revenue. If the FSA’s intrusive approach is applied indiscriminately and prevents well run, stable businesses from expanding, it damages competition and both the consumer and the economy will suffer.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. A well-run business will have built the regulatory approval timescale into its expansion plans.

  2. @Adam Smith

    You are correct, of course, but I think the argument is that a well-run business should only have to build in a timescale that can reasonably be expected of a well-run regulator.

  3. The FSMA 2000 explicitly charges the FSA to ensure the burdens are commensurate with the benefits; and the Director General of Fair Trading is required to keep the FSA’s practices under review (s160).
    If Jonathan Davies’ remarks bear any weight then the Office of Fair Trading should be looking at the FSA – it is a statutory requirement.
    But how does one prod the OFT into action? Has anyone heard of any enquiry into the FSA being initiated by the OFT? It really is just a job for the boys. I wonder what would happen if the OFT were privatised and then paid (and pensioned) on results? Bet they would be looking for work then.

  4. From the Code:-

    “Good regulation and its enforcement act as an enabler to economic activity. However, regulation that imposes unnecessary burdens can stifle enterprise and undermine economic progress. To allow or encourage economic progress, regulators must have regard to………..the impact that their regulatory interventions may have on economic progress, including thorough consideration of the costs, effectiveness and perceptions of fairness of regulation. They should only adopt a particular approach if the benefits justify the costs and it entails the minimum burden compatible with
    achieving their objectives.”

    Intrusive regulation is one thing. Obstructive regulation is rather another. It might well be helpful if the FSA were to take into account the difference between the two. What chance of that, we wonder?

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