The Report concludes that firms' compliance costs have risen since the FSA took on its full responsibilities as a single regulator a year and a half ago. It also considers ways in which firms can reduce their compliance costs in future.
FSA chairman Howard Davies said: "We accept that compliance costs have risen in the last few years - however the Europe Economics survey finds that, in spite of that increase, compliance costs as a proportion of firms' operating costs are significantly lower than indicated in earlier industry surveys. And the CSFI survey published last week showed that international firms rate the FSA above other regulators in terms of competence and a light regulatory touch.
"The Europe Economics Report shows that some of the identified increase relates to one-off work involved in moving to the new regulatory system at a time when there was naturally some unfamiliarity with it on both sides - and we expect these costs to drop away over time. Firms particularly report high costs in complying with anti-money laundering requirements. This is an area in which the requirements are driven by UK and European Union law rather than FSA regulations.
"The Report further shows that many firms could reduce the burden through their own efforts and that some meet the FSA's requirements well at low cost. We plan now to discuss the Report's conclusions with compliance officers in firms of different kinds. And we shall, in particular, be improving the advice and guidance we give, which as the Report shows, can help firms meet their obligations more cheaply."
Background
- The Report Cost of Compliance: A Report by Europe Economics is available on the FSA Website at www.fsa.gov.uk. It was commissioned by the FSA to assess the range within which firms believe that their incremental compliance costs lie; how these costs have changed since N2 (1 December 2001); the specific causes of theses change; the relationship between the levels of compliance costs and the quality of compliance; and the lessons arising for regulated firms on how they might reduce their compliance costs.
- The CSFI (Centre for the Study of Financial Innovation) Report Sizing up the City: London's ranking as a financial centre was published on 19 June 2003. It is available on the Corporation of London website.
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.
- The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.
