Firms regulated by the Financial Services Authority (FSA) face a 9.5% increase in their fees in order to fund the watchdog’s move to principles-based regulation.
John Tiner, FSA chief executive, said in order to achieve this regulatory shift the regulator needs to invest in people and information systems. Besides this, the FSA will concentrate on implementation of EU regulation, financial education of consumers and addressing financial crime. New initiatives are to be limited, but will include work on the impact of climate change on financial services.
Stephen Haddrill, Association of British Insurers director general, came out in favour of the fee rises, arguing that the switch to a principles-based approach is good news for customers and companies, but will alter the job of the regulator. As part of this, he said, it has to be accepted that the FSA will need to invest in training.
Lombard in the Financial Times (7 February) suggested that for the FSA, principles-based regulation is still a work in progress. The FSA is right to pioneer this approach, said Lombard, but finding the appropriate people to carry it out will be difficult: new managers will have to be human enough to agree when principles should take precedence over rules, but be able to take a firm line when banks’ and brokers’ executives go too far.
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