The Financial Services Authority (FSA) has spent £2.95m so far on development of the retail distribution review (RDR).
The figure has been revealed in response to a Freedom of Information request by Alan Lakey, a partner at Highclere Financial Services who is also director of Adviser Alliance. The regulator’s costs comprise £2,061,000 on internal staff working on the RDR, £249,000 on project management and £643,000 on consultants and agencies.
Lakey says: “The counter is ticking as we speak. Add to this the £500m it will eventually cost with one-off and annual accrued costs and it can be seen as the biggest waste of funds since the Dome.”
An FSA spokeswoman says: “These costs have been spread over almost four years and include policy development from initial discussions, through to industry consultation, and then publication of final rules. (article continues below)
“Levels of consumer detriment in the retail investment market are estimated at £223m per year. The RDR in general and adviser-charging specifically will go some way to correcting these failures before they get a chance to impact the market.”
In March, the FSA’s estimated incremental compliance costs for the first five years of the RDR skyrocketed to between £1.4 billion and £1.7 billion from its previous estimate of £600m. Estimated one-off costs rose from £430m to £605m-£750m. Its estimate of ongoing costs jumped from £40m to between £170m and £205m.