Regulator faces backlash on expensive new offices
THE BANK of England is spending millions of pounds extra to house the Prudential Regulation Authority (PRA) a few hundred yards away in Moorgate, instead of keeping it a short DLR journey away in Canary Wharf, it was announced yesterday.
However, financial services groups and MPs denounced the move as “lavish” at a time when financial services firms – who pay for the regulators – are tightening their belts.
The former Cazenove building brings staff in the newly merged regulator closer together, which the Bank of England says is important in building links between the arms of the organisation.
Under the new lease, signed yesterday, the regulator’s costs will rise by up to £15m over the next 15 years compared with the cost of staying put in Canary Wharf.
However, the Bank of England insists that the benefits of sharing staff in HR, legal and IT, as well as rationalising the regulatory regime, will outweigh the additional costs.
“The Bank’s firm intention continues to be that prudential regulation will operate in the future at a lower real cost than it does now as part of the Financial Services Authority (FSA),” it announced in a statement.
However, shadow Treasury minister Chris Leslie rejected the need for a move.
“They could still do that wherever they are – Canary Wharf is literally 15 minutes away, it is not a long journey,” he told City A.M.
“This will be paid for by financial services firms and their customers – the PRA is out of touch with the need for efficiency and to care for the money that is paid by others. This is lavish and unnecessary.”
PwC warned the whole operation is happening at a bad time considering the Bank’s other tasks.
“There is clear operational risk here – the Bank of England is adding around 50 per cent to its workforce, while it still has a lot going on with the Eurozone crisis and the state of the UK economy,” said partner David Kenmir.
Indeed, the whole breakup of the FSA needs to be managed carefully, according to the Association of British Insurers, whose members will be regulated by the PRA, and will foot the bill.
“We would urge that the costs to the industry of moving to twin peaks regulation are kept as low as possible,” said director Hugh Savill.