Consumers could pay price for COB changes

KPMG is warning that financial services firms and ultimately consumers will pick up the bill for proposed changes to the regulator’s Conduct of Business rules.

KPMG believes the Financial Services Authority has underestimated how much changes to COB will cost the industry and that the true figure will be far higher than it says.

Bernadine Reese, director at KPMG, says: “Costs will be involved in changes to the rules that relate to best execution, client categorisation and suitability, and new requirements regarding appropriateness.

“Although the FSA says this will be a significant cost to the industry we believe that the cost of changes in some areas may be far higher than it thinks.”

She says these costs will inevitably be passed on to firms’ clients and in many areas the costs will outweigh the benefits of regulation for firms and their customers.