A MAJOR audit of the country’s two new financial regulators shows that they have cost over £100m more than their predecessor, but are also bringing in far more money from fines.
The National Audit Office (NAO) today releases its analysis of the Financial Conduct Authority (FCA) and the Bank of England’s prudential regulation authority (PRA), forecasting that they cost £127m more in 2013-14 than their predecessor organisation did during 2012-13.
Despite a headline bill of £664m for both organisations, the value of fines collected by the watchdogs soared last year, with £472m collected. In 2012, only £312m was collected, and less than £100m was levied in each of the two years before that.
“These are still early days for the new regulators, and there are encouraging signs that their new approaches are gaining traction,” said Amyas Morse, head of the NAO.
However, Morse added that there are some issues surrounding staff retention: “Attracting and retaining the right staff are vital to keeping this progress on track, and so both regulators need to tackle this issue.”
More than a quarter of the people who have resigned from the PRA were classed as high performers, and a third of FCA staff have been there for less than two years, raising some concerns that there is not enough experience in the complex regulatory environment.
The audit says it is still too early to say how the new bodies’ approach to collecting and managing information is an improvement on the Financial Services Authority (FSA)
FCA transparency is also congratulated by the report, but the NAO says that its inability to legally access the Bank of England’s financial information limits its ability to assess the performance of the PRA.
The PRA and FCA have been operational since April last year, when they started to replace the defunct Financial Services Authority, following reforms after the financial sector’s crash in 2008.