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Twin Peaks
Categories: FSA, RDR, PanaceaIFA Comment
The iconic TV series made over 20 years ago- Twin Peaks, was a part murder mystery, part soap opera spoof, part comedy and part supernatural drama.
Office staff would stand around the water cooler and speculate wildly on who killed ‘Laura Palmer’. It was one of those moments when US pop culture reminded us just how ‘cool’ life could be.
And the audience was well and truly hooked.
As the series progressed, it attempted to expose the dark side of seemingly innocent lives. But above all the series represented a moral enquiry mixed with some humour and more than a dose of surrealism.
So it was with a sense of the surreal that I see that the FSA has proposed to hike its annual costs by 15.6 per cent from £500.5m for 2011/12 to £578.4m for 2012/13. The FSA published last week its consultation paper on fees and levies for 2012/13.
This was on top of an FSCS levy of £33m for 2012/13 confirmed in its plan and budget for the next year
FSA chief executive Hector Sants is reported as saying: “ We are mindful of any increase in costs to industry and have continued to maintain headcount and keep core operating costs in line with inflation.”
“Twin Peaks” on April 2nd eh? This is truly surreal but I guess it could have been the 1st April.
Perhaps someone better qualified than me can throw some light on the ‘moral math”?
Hector says the FSA wishes to “keep core operating costs in line with inflation.”
Inflation is falling.
Last month UK inflation fell to 4.2% yet the budget is increasing by over 16%. Where is the extra 11.4% going? That is some £65m?
And all this is being pushed through while we are still trying to ascertain the full cost of the RDR and who will be responsible for creating consumer awareness.
The FSA has advised in response to an FOI request that their accumulated RDR costs to November 2011 stand at £5.174m with projected costs to March 2013 being a further £4.805m. Some cynics may say that there is a zero missing here but we should of course expect this figure to be believed- it does seem very low though doesn’t it.
We are about to see the birth of a new regulator and as an industry we are seeing budgets slashed, jobs lost, bankers being bashed for their culture of excess, the removal of knighthoods and the nations debt reduction being the focus of Treasury attention yet the “mindful” FSA see a 15.6% hike in budget as acceptable!
Continuing increases of this magnitude are just not supportable, sustainable or reasonable. Why does the FSA continue to ignore the Regulators Code? Probably for the same reason it ignores everything else that does not fit the thinking of the day.
But, the Code does not relieve regulated entities of their responsibility to comply with their obligations under the law.
The code is based on the Hampton Principles and states regulatory activities should be carried out in a way which is transparent, accountable, consistent and proportionate; and that regulatory activities should be targeted only at cases in which action is needed.
The following are among its stated aims and intentions consideration:
- To act as an enabler to economic activity.
- To consider the impact that their regulatory interventions may have on economic progress, including the costs, effectiveness and perceptions of fairness of regulation.
- They should ensure that any decision to depart from any provision of the Code is properly reasoned and based on material evidence.
- Where there are no such relevant considerations, regulators should follow the Code.
- They should only adopt a particular approach if the benefits justify the costs and it entails the minimum burden compatible with achieving their objectives.
- Regulators should seek to reward good levels of compliance by way of lighter inspections and reporting requirements where risk assessment justifies this.
- They should also take account of the circumstances of small businesses, including any difficulties they may have in achieving compliance.
The Regulators code of 2007 continues to be overlooked by the FSA. It spells out clearly what it is not being applied to the thinking of the FSA in establishing their operational framework.
Why?
Has the FSA concluded that the concerns of so many, including MPs are not relevant or are totally outweighed by other relevant considerations?
To borrow on a little text from Dickens, "Annual income £578.4m, annual expenditure £578.399m, result happiness.
Annual income £500.5m, annual expenditure £578.4m, result misery”- once again, but not for the FSA.
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Article last updated: Feb 10, 2012
Derek Bradley, CEO
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