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Outgoing FSA chief executive Hector Sants today said society "must accept" a larger and more expensive regulator if it wants more done to lower market risks.
In its 2010/11 Business Plan, announced today, the FSA confirms it is upping its annual funding requirement by 9.9% to £454.7m.
It also confirms it will be recruiting an additional 460 staff in 2010 to implement Solvency II and to deliver the "intensive" supervisory approach needed for the very largest firms. This will lead, it says, to a 16% jump in staff costs, to £346.9m.
The regulator last year hired 280 extra staff as part of its Supervisory Enhancement Programme, which it expects will have an annual running cost of £40m.
Sants says: "If society wants a more proactive approach it must accept that it will have a larger and more expensive regulator. Intensive supervision is inherently more confrontational."
The FSA's budget for the coming financial year is £458m - excluding financial capability - which is 16.5% higher than 2009/10. Including financial capability takes the total budget to £490.9m.
It will have to make do without chief executive Hector Sants for most of the financial year as he steps down, as planned, in the summer after three years at the helm.
Last month, the FSA announced a restructure to its fees and levy calculations for 2010/2011, which will now be on the size of the regulated business. There will be a minimum fee to cover the general cost of regulation and then additional fees will be based on the firm's income, rather than the number of approved persons.
Mortgage and insurance brokers will have to fork out higher fees while independent financial advisers will pay less.
For mortgage brokers, minimum fees are set to increase 34% from £745 to £1,000. General insurance brokers are seeing a 122% increase, although this is from a lower base. Until now, they have only paid £450.
IFAs, however, will enjoy a 46% fall to £1,000. In the past, they paid £1,850 minimum fees plus 50% if they had different permissions.
All firms pay a flat fee of £1,000 and after that a sliding scale operates - a process it calls "straight-line" recovery [of fees].
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| Comment | Sants: If society wants results, it's going to cost |
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Incredible, just incredible
You really begin to wonder if you are "sane" any more with the never ending comments that come from the FSA and Mr Sants. "I't going to cost" to get results. What a statement from a regulator that we have paid some £1.3 Billion + so far and soon will cost us 1/2 £ Billion a year, yet it has failed, failed and failed time and again so to say we must pay more for "results" is just mind blowingly arrogant and incredible. We should have had results 10 years ago Mr Sants and not after we have paid your organisation over £ Billion for "NO RESULTS" and massive costs just to do put in place whatever crazy idea you came up with to justify your existence. If you have been captain of a ship Mr Sants I expect you would have walked the plank years ago.
Posted by: Michael Fallas
bigger is always better?
I wonder if government will spot the flaw in the reasoning? The reasoning appears to be that the fSA's failure has been the result of a lack of resources. But looking at each failure that has occured they seem to be due to incompetence on the part of the people they DO employ not a lack of personnel
Posted by: snooks
Anon E Mouse
Society may accept the cost - Society doesn't pay the fees - we do ! Hopefully the costs don't include a Golden Handshake for the current chief Exec
Posted by: Robin Hunter
Then Society should pay
"IF" this is what society wants, then they should pay for it through a product levyand not squeeze more money out of already squeezed IFA's. However it sounds like more jobs for the (Incompetent?) boys to me.
Posted by: CSC
If the consumer wants it let the consumer pay!
When we had self regulation it made sense for those being regulated to pay for that regulation. It has never made sense under statutory regulation why the regulated should pay. If the consumer wants statutory regulated protection let them pay not those being regulated. It's the world turned on its head.
Posted by: Victor Meldrew
Where is this man's logic?
Reading these latest comments from the FSA chief exec [salary +/- £625,000 pa] you may like to take into account that the fees are paid for largely [as it says] by independent advisers, not by society, or the banks/buliding societies who are historically responsible for 90% of upheld complaints from consumers aka 'society'. This is the chap who said on Radio 4's Today programme, that the FSA will be proactive to protect against 'too many people being sold products that are not fair'. Not 'pre-approve products before they are marketed as that would be too complicated'. So he thinks checking on 10,000 plus independent advisers is simpler than checking on the considerably smaller number of Authorised and Regulated providers? Can anyone explain the logic here for me please?
Posted by: Lyn Cooke
Words, almost, fail me
So more staff needed in Canary Wharf. Two points to make. 1) With the IFA population due to be cut by anything up to 40% by 2012, that must leave a surplus of staff, so why not redeploy them. 2) Why do they need to be in Canary Wharf on London salaries. What is the problem with using cheaper locations, with less competition for staff in those areas, hence lower wages and no bonuses needed to atract them.
Posted by: Mike Hillier
Missing the Point
I think what Mr Sants is trying to remind us is that if we want a well run regulatory system then we need to employ real "talent", such as bankers. As we all know they won't even get out of bed unless they are paid by the £millions.
Posted by: John
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Complete Madness
What does this guy think he's saying. More people with more wasted money and more of everything that won't work. When will he and the others learn? Lets all become regulators then! What we have is the WRONG REGULATIONS and we don't need anymore of this rubbish. What we need is a KEEP IT SIMPLE STUPID approach. Fewer people from the right area of industry and not more of the same failed ones. More staff with the same cr*p will mean more c*ck ups! The troube in this country is we have the wrong staff making decisions on behalf of the populous. And they get paid handsome sums for this bullsh*t. Why doesn't he just ride off into the sunset with his bit fat bonus.
Posted by: Incompetent Regulators Awards Team