FCA expenditure up 49% in seven years

Financial services regulators in the US, UK and Hong Kong have increased their expenditure over the last seven years by a total of 59.4 per cent, according to research from Kinetic Partners.

Since the end of the 2006 to 2007 fiscal year spending at financial services regulators in the US, UK and Hong Kong have increased an average of 8 per cent each year.

In comparing the growth in expenditure between the three regulators, Kinetic Partners found that the biggest increase was at the SFC, which increased its spending by 120.2 per cent in the last seven years.

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This compares with a 61.9 per cent increase at the Securities and Exchange Commission in the US and a 48.4 per cent increase at the UK’s Financial Conduct Authority over the same period.

Kinetic Partners’ research found the US SEC, the UK Financial Conduct Authority and the Securities and Futures Commission of Hong Kong (SFC) had a combined expenditure of about $2.4bn (£1.4bn) in 2012 to 2013.

This was $900m (£535m) more than the total expenditure before the financial crisis in 2006 to 2007 of nearly $1.5bn (£892m).

However, Kinetic Partners’ research found the scope of this increase in expenditure spanned beyond increases in staff numbers at the three regulators.

The study revealed that the number of regulatory staff increased by just 36.4 per cent from 2006 to 2007 to 2012 to 2013 across all three agencies.

Julian Korek, chief executive at Kinetic Partners, said: “This disparity between expenditure and headcount could be indicative of a focus by the regulators to improve market surveillance by developing innovative technologies and hiring more experienced, specialised staff.

“For our clients across the banking, asset management and insurance sectors, we are seeing a mirroring of this investment in systems to monitor and report on transactions.

“This is coupled with a recognition that, for systems to work effectively, a different set of staff skills and training is required than traditional compliance or risk management expertise. We expect this investment in technology to continue to play a key role, in firms both large and small.”