View more on these topics

FSA cost savings are nowhere near enough

So the Financial Services Authority has vowed to save firms 1m by merging customer functions in its approved persons reg-ime into a new single category.

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.

Recommended

Instant decision tool launched

Money Partners Touch has launched an instant decisioning tool for brokers called eDecision. This will allow its brokers to obtain instant decisions online. For a limited period, brokers using eDecision can benefit from free real-time valuations and credit searches.

Two big networks plan to double in size this year

Two of the industry’s biggest networks are gearing up for recruitment drives, fuelling talk of consolidation in the sector. Pink Home Loans and The Mortgage Times Group have unveiled plans to double in size by the end of the year. Pink’s strategy is to expand by acquiring rival networks while MT aims to recruit appointed […]

School plan could hit prices

Plans to revise the way school places are allocated have led to fears of house price slumps in catchment areas.

Bank of England freezes base rate

The Bank of England froze interest rates last week at 5.25%. Industry experts are split on whether another rate rise is needed to bring inflation under control with many predicting stable a base rate throughout 2007.

Simon Fletcher

Auto-enrolment: pay attention or pay the price

By Simon Fletcher

As a chief executive officer of a business in the financial services sector, I have been dealing with the introduction of auto-enrolment for our clients for some time, but I can also speak from an employer’s point of view, having to go through the process ourselves.

Newsletter

News and expert analysis straight to your inbox

Sign up