FSA Launches Study Into Regulatory Costs For UK Firms

by Robin Pilgrim, LawAndTax-News.com, London

08 March 2005

The UK's Financial Services Authority (FSA) on Thursday announced the scope, form and timing of its study on the costs of regulation.

The study will be conducted in partnership with the independent Financial Services Practitioner Panel, and will look in particular at the impact of costs on small firms and on wholesale firms operating in internationally competitive markets.

The study aims to:

• Provide robust estimates of the costs to firms of regulation that stems from the Financial Services and Markets Act 2000 (FSMA) in order to identify where there may be discretionary elements of regulation that are costly to firms, but which are not matched by corresponding benefits;
• Analyse the impact of regulation on firms' operating costs and how far these costs go over that which firms would spend anyway as part of day-to-day operation; and
• Identify, wherever practically possible, the extent to which FSMA regulation affects the prices that firms charge, the volumes, quality and variety of products or services that firms offer and firms' ability to remain innovative and competitive.

Kari Hale, Director of Finance, Strategy and Risk at the FSA, explained that:

"It is a priority for the FSA to develop a deeper understanding of the impact of the costs of regulation on firms, especially smaller firms, and ensure that these costs are justified by the benefits. If the study highlights areas of regulation that are expensive but offer little benefit to firms, consumers or the markets, we will look for ways of easing the burden on firms."

The completed study is set to be published towards the end of this year, according to the FSA.

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