FSA urged to explain delays in financial start-ups authorisation

A leading solicitor today called on the Financial Services Authority (FSA) to explain why it was now taking almost twice as long to authorise businesses to begin offering financial services and products as a year ago.

Reynolds Porter Chamberlain (RPC), a City-based solicitor, said the average application now took 19.5 weeks to get the go-ahead from the FSA compared with only 11.4 weeks a year ago, a 71 per cent increase. Prior to the credit crunch, in the first quarter of 2007, the typical application was taking just 7.5 weeks on average.

Jonathan Davies, a regulatory partner at RPC, said the FSA was under pressure following the banking crisis to show that it was an effective regulator, but called on it to hire more staff if the extra demands were preventing it from working efficiently.

"Delays in authorising new entrants into the financial services market damage consumers by reducing competition and they also damage Britain's international competitiveness," Mr Davies said.

"The FSA needs to come clean on why it is taking longer and longer to authorise financial services firms. Are they implying that they were not checking new applicants properly a year ago, or are they just dragging their heels?"

The FSA was unavailable for comment last night.