FSA under attack for cost of regulation

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The Independent Online

More than three-quarters of financial services companies believe the Financial Services Authority overburdens them with regulation, a survey showed yesterday.

More than three-quarters of financial services companies believe the Financial Services Authority overburdens them with regulation, a survey showed yesterday.

Half of all practitioners agreed strongly that the regulatory system placed too great a burden on firms and one-third agreed to a lesser extent, according to a poll of more than 3,000 companies.

The Financial Services Practitioner Panel, a body of City experts set up six years ago to monitor the FSA, said some respondents had expressed a "sense of frustration" with the regulator. "This then led some to point to examples of perceived unfair treatment - public 'dressing downs' and retrospective judgements," the report said, adding four in 10 believed the FSA did not operate on a principle of fairness.

Small firms were the most unhappy. "Many felt the FSA retained a civil-service view which led to it continually developing policy and being over-zealous when implementing regulations," it said. The panel, chaired by the Prudential's chief executive Jonathan Bloomer, produces the report every two years.

Regulatory costs were a major issue, with only one in 10 of the firms surveyed seeing costs as reasonable. And almost two-thirds of respondents said the FSA gave too much weight to consumer protection.

However, it was not all bad news for the FSA. Overall satisfaction has risen from 2002, with 22 per cent of those surveyed saying their relationship with the FSA had improved versus 8 per cent saying it had worsened.

Mr Bloomer said: "The panel has identified a number of priorities and the FSA must now reflect on these and decide how it is going to work with the industry to address them."

The FSA gave the report a mixed reception, saying it had already taken steps to review the cost of regulation and John Tiner, its chief executive, said:"We do not accept ... that the FSA is disproportionately focused on consumer protection. We pursue consumer protection in conjunction with our other objectives."

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