Tyrie raises concerns about FCA being value for money

Tyrie raises concerns about FCA being value for money

The Financial Conduct Authority should not increase its operating costs without a clear and adequate explanation to parliament, the chairman of the Treasury select committee has said.

Andrew Tyrie has written to John Griffith-Jones, the regulator’s chairman, seeking such a commitment.

“Regulation is sometimes mistakenly taken to be a free good; consumers end up picking up the tab, either in higher prices or reduced services, or both,” he stated.

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“So the FCA’s costs need to be kept in check. The Parliamentary Commission on Banking Standard concluded that the FCA should become a smaller, more focussed organisation. The recommendation is as relevant for the FCA now, as it was in 2013.”

Mr Tyrie said parliament will expect the FCA to be more transparent about how it attempts to meet the Parliamentary Commission on Banking Standard’s recommendation in future, adding “regulators should not be exempt from the need to obtain better value for money”.

In April, the FCA’s annual business plan showed that taking over the regulation of consumer credit has pushed the regulator’s total budget for 2016 to 2017 to £519.3m, an increase of 7.8 per cent on the previous year.

Mr Tyrie expressed concern that the regulator’s accounts “lack clarity” and said costs resulting from new activities and those from changes to existing one should be clearly set out.

He asked the FCA’s new chief executive, Andrew Bailey, about the issue of the regulator’s budget when he appeared before the committee earlier this month.

Mr Bailey said it would be a “sensible aim” for there to be a cap on the amount the FCA can spend on its existing responsibilities, but not for new responsibilities.

Responding to Mr Tyrie on an earlier occasion, Mr Griffith-Jones said the FCA continues to be committed to delivering value for money in achieving statutory objectives.

He said: “This means looking at the total cost of regulation, which includes both the costs incurred by the firms and the benefits delivered to consumers, and the two must be taken together for the full picture.

“We regularly consider how to make optimal use of our resources. At the same time, it is important to remember that the remit and responsibilities of the FCA have been steadily widened since its inception, for example taking on the regulation of consumer credit and the creation of the Payment Systems Regulator.”

Gretchen Betts, a financial planner with Bridgend-based Broadway Financial Planning, said: “Overall if they can keep their costs down it has a knock-on effect to potentially other businesses and maybe how much our regulatory fees are.

“But at the same time I wouldn’t want to think the costs are cut and services we need from the FCA will be affected.”