Cost of scrapping the FSA jumps 75% to £44m

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The total cost of scrapping the FSA and replacing it with the Financial Conduct Authority has hit almost £44m, up 75 per cent from its top estimate of £25m.

The regulator has today published its annual report for 2012/13, reflecting on the final year of the FSA.

It reveals the industry incurred costs of £31.6m in 2012/13 to pay for the cost of abolishing the FSA as part of the regulatory restructure to make way for the FCA and Prudential Regulation Authority.

This is on top of £10.9m in regulatory reform costs in 2011/12 and £1.4m in 2010/11.

The FCA says to date there is an underspend on the regulatory reform budget of £2.4m, which will be used to reduce fees for 2013/14. But it says the industry will have to pay another £2.6m towards the regulatory restructure over the next year.

In its business plan in March 2011, the FSA estimated the cost of creating the FCA would be between £15m and £25m, and the cost of creating the PRA would be between £75m and £150m.

At the time, the FSA said: “Throughout the process, the FSA will take care to minimise the impact of the cost of regulatory reform on firms.”

Advisers in the A13 fee block have seen a 16 per cent increase in regulatory fees this year, from £32.8m in 2012/13 to £38.1m.