Outlook: If there is one thing guaranteed to unite the City, it is fury about the fees charged by its regulators.
Yesterday's announcement of a 16 per cent hike in its budget by the Financial Services Authority (FSA) could always be counted on to inflame bankers and insurers.
It will take the regulator's budget up to £578m from £500m. Despite this, some 42 per cent of regulated firms will see no increase at all. They are mostly smaller firms, the sort of SMEs, in fact, that can't get money from the banks at the moment. So it's hard to argue with the FSA giving them a break.
Which means most of the cash will be stumped up by the big boys, the high-impact firms whose failure can cause real damage.
The 16 per cent is split roughly into three, with a third spent on general IT and infrastructure costs, another third going towards one-off reorganisation costs incurred as a result of the Government's shake up of the financial regulatory system, and the final third paying for increased supervision.
The second one was always going to be costly but at least it's a one-off. As for infrastructure, it seems fair enough that the watchdog should get the same sort of up-to-date kit as that used by the banks it polices.
But this leaves only 5 per cent left to be spent on increased supervision, paying the (presumably) increased salary bills of the supervisors.
That actually seems rather low if you think about it.
The City loves to bang on about how it is a world-class financial centre, with world-class firms and world-class people who need world-class pay. Well, if that's that case, it really ought to have a world-class regulator, oughtn't it?
And if you want a world-class regulator you're going to have to pay world-class fees to attract world-class watchdogs to it.
Banks are always saying that the justification for the super-sized salary and bonuses packages they are so fond of lavishing on staff are necessary for them to attract and retain top talent. They can hardly complain if the regulator does the same thing, particularly given the events of the past few years.
And yet, with only 5 per cent of the regulator's increased costs going towards that, is it really happening?Reuse content