This change will reduce the number of forms companies have to submit per employee under the regime and will result in savings at the regulator.
This will be seen as a positive move by the regulator and the government. Anything the FSA can do to remove unnecessary or ineffective regulation is great – but this saving is simply not big enough.
Don’t get me wrong – I am coming round to the view that the FSA is getting to grips with the mortgage market in a positive way. It is beginning to understand the industry’s issues and is forcing reg-ulated firms to change their behaviour for the better.
Treating Customers Fairly has made lenders and brokers think about the way they deal with customers and this will have a beneficial longer term impact on their performance.
And you only have to search for articles about the FSA on Mortgage Strategy Online’s news search facility to see the volume and diversity of the issues it is involved with.
But the savings announcement came in the same month that the FSA issued its consultation paper Regulatory fees and levies 2007/08 – does it think we have such short memories?
The FSA’s 2007/08 budget is planned to rise by about 27m to 301m – roughly a 10% increase on 2006/07.
To put this into perspective, the consumer price index is running at an annual rate of less than 3%.
So, faced with an annual budget increase of 10%, the change to the approved persons regime represents a saving of less than a third of one percent.
Rather than a budget increase of 10%, I would have preferred to see a saving of 10%.
This issue is significant. I can understand the reluctance of intermediaries to respond to official consultation papers as they may not want to be seen to be openly saying anything negative about the regulator.
But the FSA suggests that the payers of its fees should be aware of what is being proposed and what they will be paying.
All stakeholders have to play their part. Brokers have to make their views known about the proposed FSA budget increase, however uncomfortable they might feel about doing so.
After all, they are the regulator’s customers and the final decision about the increase will be made by the FSA board at a meeting in May.
The Treasury Select Committee must ask probing questions of the FSA to improve its workings. If the costs of a process outweigh its benefits, it should go.
Finally, the regulator must take a good look at itself. It only needs to eliminate another 26 processes and the 2007/08 budget would match the previous year’s. Now there’s a challenge.