Q.WHICH FIRMS WILL BE AFFECTED BY THE OVERHAUL?
A.The?Financial?Services Authority (FSA) currently regulates 20,000 firms. The vast majority of those will simply be regulated by the new Consumer Protection and Markets Agency, which will police conduct in financial services and protect customers. Although there will be some changes, they won’t incur any significant extra costs.
Q.WHICH FIRMS ARE GOING TO FACE HIGHER COSTS?
A.All banks, investment banks and insurers will also be regulated by a new Prudential Regulation Authority (PRA), which will operate as a subsidiary of the Bank of England. But they will still be policed on a day-to-day basis by the CPMA, meaning they will have to comply with two different watchdogs.
Q.WHY WILL IT COST FIRMS MORE?
A.These firms – which total between 1,500 and 2,000 – will need more staff to manage relations with two watchdogs, which could request information in different formats. The cost of overhauling compliance systems will also be considerable.