FSA needs a further £78.4m in funding

The Financial Services Authority (FSA) is to increase its annual funding requirement from £500m to £578.4m for the next financial year.

Hector Sants, chief executive of the FSA, says the regulator will cap staff levels, but needs more cash to focus on quality of staff, to implement regulatory reform and invest in IT infrastructure.

He says: “A significant part of this increase reflects the costs of implementing the government’s reform of the UK regulatory framework.

“The current £32.5m costs for the restructuring are within the overall estimates set by the Treasury last year, which equates to 28% of the increase in AFR [annual funding requirement].”

Sants says: “The increase in fees will be borne mainly by larger firms, reflecting the resources applied to intensive supervision of high-impact firms. (article continues below)

“Medium-sized firms will see a proportionate increase reflecting the type of business they conduct.”

He adds: “However, 42% of the FSA’s authorised firms, which only pay the FSA minimum fee will see this unchanged for the third year running at £1,000.

“We recognise that the average increase in the FSA’s fees for last five years has been around 13%.

“This rate of growth cannot continue indefinitely, particularly when the financial services industry continues to be under pressure and so we would like to emphasise our commitment to ensuring direct costs of regulation are proportionate.”