Spending watchdog to investigate FSA

The Government's spending watchdog, the National Audit Office (NAO), is to investigate the FSA.

Speaking yesterday, Sarah McCarthy-Fry, Exchequer Secretary to the Treasury, announced the NAO would perform a full audit of the regulator.

The move has been welcomed by AIFA, which says the FSA's budget has ‘rocketed' in recent years.

In a statement, McCarthy-Fry says: "I am pleased to announce today that the Financial Services Authority has decided to appoint the Controller and Audito General as its financial auditor from the next financial year, 2010-11.

"That will enable the Public Accounts Committee to receive and investigate reports into aspects of the economy, efficiency and effectiveness of the FSA's performance."
The FSA's total budget now stands at over £400m per year, and AIFA says it is vital the regulator is held to account over its spending.

During its last audit, in 2007, the NAO said the FSA had made progress in spending its budget more efficiently since it was created in 2002, but claimed it needed to do more to demonstrate value for money and give a clear indication of its costs.

Chris Cummings, director general of AIFA, says: "Since the FSA's creation, we've moved full circle from rules based regulation to principles, and then back to prescriptive regulation yet again. Not to mention the increasing volume and influence of initiatives coming out of Europe, which often supersede FSA regulation.

"Lessons must be learned about the relative effectiveness of regulatory interventions. We can not just have change for change's sake. There must be a clear and demonstrable benefit to consumers and industry."