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Tyrie calls for help assessing FSA cost benefit analyses

Treasury select committee chairman Andrew Tyrie has called on industry to help shed light on how effective FSA cost benefit analyses are.

In a TSC session on the accountability of the the Financial Conduct Authority this morning, Tyrie said by providing information about regulatory costs industry can help the committee understand how they compare with those expected by the regulator.

His call came after Aviva operational and regulatory risk director Angus Eaton repeatedly called for transparency in the new regulatory set up. Eaton said it is vital in terms of the future regulator’s accountability and how it puts together new regulation.

Tyrie said: “You have argued for greater transparency in almost every answer you have given. Transparency for cost benefit analyses, of which regulatory cost obviously is an important part of the equation, is manifestly lacking and we need the industry to supply it to us .”

The FCA is set to replace the FSA at the beginning of 2013.


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Tyrie has been repeatedly given figures, figure,figures.
    What’s the matter with the man?. Let’s start with the costs of RDR; starting out at a massive £600 million, and reaching….. so far….. £1.7 BILLION.
    Words fail me. Maybe it’s simply time for him to pass the baton to someone more capable and less credulous.

  2. How much will it cost to obtain any benefit at all?

    Turner said we’ve had twenty years of misselling, how is that possible with the rules and regulations? Has the regulator been using its resources correctly? Have the regulators been looking in the right places?

    Does anybody listen?

  3. Andrew Tyrie is looking for answers from the industry & the FSA.
    He is totally independent & wants accountability from the FSA & has supported IFAs.
    He is NOT (unlike Mark Hoban) in the FSA camp.
    I would suggest that we support his initiatives as like most IFAs he is looking for provision of good professional advice without firms being hounded out of business by the regulator.

  4. I would have thought that the answer (ie how effective etc etc) – on a scale of 1 to 10 – comes in at about NEGATIVE 7, and that the only people who can’t see or understand this live in the ivory tower, to wit the FSA.

    Is that a good enough answer, Andrew? Because – as Evan and Old Dog say or imply – absolutely no-one will listen to or act on behalf of the IFAs who, by their very nature are independent and not part of some humoungous mass who ride roughshot over everything and everybody.

  5. What about new regulatory initiatives that the FSA launches with no Cost:Benefit analysis at all. The most obvious example is the MAS which is just an expanded version of what used to be called the MGS but now with a separate levy burden of £40m+. That was launched with neither any prior Cost:Benefit analysis or consultation ~ not that any of the FSA’s “consultations” amount to anything more than token shams anyway, not least because none of the feedback submitted is published for all to see and to debate, as should be the case. All the FSA says is that it’s considered and “taken on board” the feedback it’s received. Oh yes? Just what has it taken on board? We’re never told.

    Already the MAS has wasted, what was it, £4m on an advertising campaign that it’s had to admit was a flop. But never mind, it’s all just OPM, so what the hell?

    Rather than looking at specific areas in which the FSA is manifestly failing to conduct itself properly, Mr Tyrie might well do better to concentrate on the FSA’s wilful disregard for the Statutory (which means that it’s law) Code of Practice For Regulators, the first two paragraphs of which state:-

    Effective and well-targeted regulation is essential in promoting fairness and protection from harm. However, the Government believes that, in achieving these and other legitimate objectives, regulation and its enforcement should be proportionate and flexible enough to allow or even encourage economic progress.

    Is the RDR, even though parts of it are hard to argue with, proportionate and flexible or likely to encourage economic progress? Hardly anyone seems to think so. Yet the FSA’s foot is hard down on the gas pedal or this dangerously unstable juggernaut and we’re all going to have to get with the programme, regardless of what anyone else’s opinion, or quit. And

    This Code supports the Government’s better regulation agenda and is based on the recommendations in the Hampton Report. Its purpose is to promote efficient and effective approaches to regulatory inspection and enforcement which improve regulatory outcomes without imposing unnecessary burdens on business, the Third Sector and other regulated entities.

    It seems as though all the TSC’s endeavours to pin down the FSA on one issue or another are based on complete ignorance of the very existence of the Code. Yet this cannot be the case because I for one (and possibly others) have made more than one attempt to bring the Code to Mr Tyrie’s attention. I’ve even sent him a hard copy. And, worst of all, the government has declared that the FCA, like the FSA before it, will be accountable only to its own board which, of course, means accountable to nobody, least of all the TSC.

    So just what does Mr Tyrie realistically expect to achieve? And what has the TSC achieved so far? Hector Sants, with Sheila Nicoll sitting beside him smirking contemptuously, has effectively thumbed his nose at the Committee by saying that nothing will change unless it [the Commitee] manages to get the law changed. But how’s that going to happen, given that the Government has effectively washed its hands of any calls for the FSA to be made more accountable? It all seems to be a terrible waste of time and money.

  6. charlie palmer 9th March 2012 at 1:50 pm

    Dear Mr Tyrie,
    You asked for information on the costs of FSA.

    We run a network of IFAs – 500 of them turning over £30m pa income. I founded it and we have one mission – to handle the compliance of all our IFA members. The fee they pay includes PII and FSA fees. It comes in at between 5% and 25% of their individual turnover – and as a group it averages out at 12%. On top of that fee you should add provisions for other uninsured liabilities driven by FSA action alone (redress) and there is another 1% of turnover. So an average of 13% of turnover is an accurate figure for our 500 IFAs.

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