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Twin peaks regulation costs 24% more than FSA

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  • 25/03/2014
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Twin peaks regulation costs 24% more than FSA
The Financial Conduct Authority and the Prudential Regulation Authority together cost 24% more in 2013 to 2014 than the Financial Services Authority in 2012, a report has revealed.

The National Audit Office forecasted the combined cost of the two regulators was £664m.

This prompted the NAO to issue a warning that the regulators would have to demonstrate value for money for customers in the future.

The increases were attributed to more front-line staff, costs to replace IT and premises costs which they say will allow them to reduce harm to consumers and shelter the taxpayer from future losses.

But both bodies are struggling to retain staff which is leading to a lack of experience in the face of a more complex regulatory environment.

The PRA has lost 26% of its staff through resignations which it classed as being high performers and more than a third of employees at the FCA have less than two years’ experience.

Amyas Morse, head of the National Audit Office, said: “These are still early days for the new regulators and there are encouraging signs that their new approaches are gaining traction.”

Morse said attracting and retaining the right staff ia vital to keeping this progress on track so both regulators must tackle the issue.

Both authorities were praised for changing their internal cultures to shift towards a “judgement-based” forward-looking approach but co-ordinating the objectives of the two authorities was flagged as a risk.

It highlighted that there was currently a good working relationship and level of communication between the authorities but it needed to be built on to manage the potential future conflict of objectives.

 

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