The Financial Conduct Authority, has revealed it would need an extra £14.3 million this year just days after a leaked report sparked anger and wiped billions of pounds off the value of big insurers.
The FCA said in its business plan published on Monday that its annual funding requirement would rise from £432.1 million to £446.4 million — an inflation-busting increase of 3.3 per cent.
Chief executive Martin Wheatley, who faced calls over the weekend to resign, said the bulk of the increase in fees charged would fall on larger firms.
“We have worked hard to ensure that the small firms we regulate pay the least and once again we are able to keep the minimum fee at the same level,” he said. “The increases will be borne mainly by larger and more complex groups, which pose the most risk and are costliest to regulate.”
He added that 42 per cent of the firms regulated by the FCA would pay the minimum annual fee of £1000 a year.
About £2.4 billion was wiped off the value of life insurers on Friday after the FCA’s director of supervision was quoted as saying the regulator planned to examine 30 million old policies.
This was due to have been one of the centre-pieces of today’s business plan but the FCA was forced to clarify its position as share prices tumbled. It announced a far less wide-ranging and potentially costly review of closed life policies.
Today it revealed its other major plans for the new financial year. Top of its list is working on how banks can cut the risk of traders manipulating key benchmarks in the wake of the Libor scandal and the ongoing reviews of alleged currency and gold rigging.
Wheatley said: “We are determined firms need to take the matter of manipulation of any benchmark seriously and we will be working with firms to seek out any issues that may remain.”
The regulator also plans to look at conflicts of interest in investment banks and how they ensure confidential information received by one part of the business is not abused by other areas.
Fund managers will also come under scrutiny in the coming year with focus on their trading activities and dealings with clients.
The FCA also takes over consumer credit regulation from the Office of Fair Trading from tomorrow. This will cost £41 million, which has been ring-fenced from its main budget.
The regulator said the increase in its overall funding needs had been driven by its new role as a competition regulator and lower underspending in the previous year.
Monica Gogna, of legal firm Pinsent Mason, said: “The movement is a reflection of the amount of regulatory change the FCA is grappling with but this is also likely to be reflective of the increased costs for regulated firms who are also implementing this change.”