National Audit Office to scrutinise FSA's value
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The government has announced that the Financial Services Authority will have to demonstrate its value to the National Audit Office from the next financial year.
The NAO carried a one-off review of FSA in 2007.
At the time the NAO recognised the progress the FSA had made since it was set up 2002, but said the regulator had to do more to demonstrate its impact and provide a clearer indication of what its different activities cost.
The Association of Independent Financial Advisers has welcomed the announcement, as it has campaigned for NAO scrutiny of the FSA for several years.
The trade body says transparency is crucial as the FSA’s budget currently stands at £437m a year.
Chris Cummings, director-general at AIFA, says: “We have always said that, as a statutory body, the FSA must be more transparent and clearly demonstrate value for money.
“The appointment of the NAO ensures that the Public Accounts Committee can fully scrutinise the FSA’s performance on a regular basis.”
Cummings says that lessons need to be learned about how effective regulatory interventions have been.
He adds: “We cannot just have change for change’s sake.
“There must be a clear and demonstrable benefit to consumers and industry.
“The NAO’s appointment is a big step towards achieving this goal.”
Readers' comments (9)
Marcus | 23 Nov 2009 10:32 am
I would put the FSAs value at negative. All the requirements for TCF are time consuming for intermediaries. The "tick a box" culture is fruitless and delivers very little to the consumer. It is right to treat your customers fairly and to be transparent, but don't drown us all in red tape for the client and adviser. I think TCF is just an exercise backed by the governemnt to employ over educated individuals and keep them off the dole.
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Anonymous | 23 Nov 2009 10:40 am
Apart from the legitimate ongoing clean-up of rogue firms and brokers, I fail to see how the FSA can justify its policing of lenders and banks - when their income is made up of levies paid by the institutions they are policing???! Perhaps we require a two-tier sytem where one body controls the regulation for small firms and brokers and a separate government body solely oversees the banks, building societies, lending institutions and providers?
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Ronnie Forrest | 23 Nov 2009 10:57 am
It does seem sensible that the body checking us has some check on it at long last.
I wish I could start a business in 2002 and have a budget of £437m per annum in 2009 provided, to a large extent, by subscriptions from people who have no say in the amount they have to pay to support a body that wields enormous power over them.
Having said that my dealings with the FSA in reviews and interviews have been very positive and I am sure the majority of FSA staff are out to assist the smaller business and provide guidance and feedback rather than "the big stick".
If we can all work together and admit shortcomings we can continue to have a successful and progressive industry without the people none of us wish to have in it.
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Richard Whitaker | 23 Nov 2009 11:06 am
I have no problem with TCF or RDR but it is astounding to realise how much the incompetence of the FSA on regulating banks has cost us. It would take a lot of IFAs to cost the public the same amount through incompetence.
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Henry | 23 Nov 2009 11:07 am
With a budget of £437pa, one has to ask the question, 'Who benefits?'. In the case of mortgages, certainly not the lenders, not the intermediaries, and I doubt that any consumer is aware of any benefits. The consumer does, of course, have to pay higher fees to help contribute towards the FSA's running costs.
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Anonymous | 23 Nov 2009 11:29 am
At last, just as the FSA is about to disappear after the general election, people will be able to see what a fruitless waste of time and money the whole exercise has been. Very similar in fact to New Labour!
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Kevin friend | 23 Nov 2009 11:39 am
The FSA has faied to demonstrate that it understands the Mortgage sector since regulation was introduced. The recent MMR jab is going to further stiffle any growth. i am not sure if the NAO will help but it is accountabilty that will give us some comfort.
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Glen McKeown | 23 Nov 2009 2:28 pm
The cost of the FSA does not stop at £437m. That is purely for running Canary Wharf.
Add to that the total the cost of all the Compliance Officers and ancillary staff in financial companies. Add the cost of all the compliance literature - most of which is useless. Add the cost of mismanaged reviews. Add the cost of the training that adds little of value for the client.
Add all that and the bill is probably well over£1.5bn a year.
Then determine if the current regulatory regime is providing the consumer with value for money.
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Children should be seen and not heard! | 25 Nov 2009 2:20 pm
Dear Market,
Just to let you know I think my role in leading the FSA at c£700,000pa has been value for money. It only represents around 5bp of the budget and I have to make at least 6 speeches a year plus attend countless lunches and dinners....my trips to the Caribbean have been curtailed to four a year! My wife is not happy with so much work, but we are looking forward to more relaxing times when I join the Bank of England.
So listen closely children, I hope you don't mind me referring to you as such, but that is how we see you; just be nice do as you are told and do not worry about matters which should not concern you.
Affectionately yours,
Hector xx
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