The financial services sector is braced for a sharp rise in regulatory costs as the Financial Conduct Authority, one half of the new ‘twin peaks’ regime that comes into foce in the next two weeks, has revealed a budget amounting to 82 per cent of the combined Financial Services Authority.
In its business plan for its first year of operation, it was revealed that the FCA plans to spend £445.7m in 2013/2014 towards ongoing regulatory activity. In contrast, the FSA allocated £543.5m towards ORA in its 2012/2013 budget.
The amount of expenditure for the Prudential Regulation Authority, the other half of the new regulatory regime, has not yet been revealed, but it is likely to be a multiple of several times the £97.8m difference between the FCA budget for the coming year and last year’s FSA budget.
Staff costs for the first year of the FCA’s operation will be £261.3m, making up about 70 per cent of the £371.8m spent by the FSA in 2012/2013.
Headcount at the FCA will be 2,848, approximately 71 per cent of the FSA’s 3,992 alloted in its budget for 2012/2013.
Martin Wheatley, chief executive officer designate of the FCA, said: “Our first year as a new regulator will be an exciting and challenging time but one for which we are well prepared. We are introducing new approaches to the way we do much of our work, becoming much more proactive and consumer focussed.
“A risk for all regulators is becoming bound to conventional thinking. That is why the new regulator will be much more transparent, so we can learn from our mistakes. There is no room for the poor behaviour of the past. We will take action early and decisively when we see evidence of poor practices.”
