The Government has failed to provide a cost-benefit analysis that justifies its plan to scrap the FSA in favour of a twin peaks regulatory system, according to the Small Business Practitioner Panel.
Giving evidence to the Treasury select committee, panel chairman Guy Matthews said systemic risk could have been dealt with under an augmented FSA.
He said: “The constant burden of regulation is probably disproportionate and we want proportionality. We have not seen any evidence of a cost-benefit analysis suggesting this could not have been achieved within the exiting structure.”
The Treasury’s consultation document estimates the cost of the changes to be £50m over three years.
Matthews said dual regulation could take up “significant management time” for small firms. He said: “Some smaller entities do not separate prudential and conduct sides and have to provide separate data.”
Financial Services Consumer Panel chairman Adam Phillips said efforts to keep regulatory costs from rising could lead to less supervision.