The annual funding requirement for 2010/11 is £454.7m, up from £413.8m in 2009/10. The 9.9% increase reflects the FSA’s intention to minimize any fee increases by concentrating only on essential areas of work:
Hector Sants, FSA chief executive, said:
“The way the FSA regulates has changed radically, both in approach and intensity over the last three years.
“We recognize that any increase in the industry’s costs is unwelcome at a time when margins are under pressure in some segments of the industry. However, the overall increases are necessary to deliver our new intensive supervisory approach. The new fee structure will ensure that the costs are fairly distributed and the increased investment is paid for by those firms who will be subject to the increased scrutiny.”
In 2009/10, the FSA hired 280 new staff as part of its Supervisory Enhancement Programme. The full year costs of these staff will be represented for the first time in 2010/11 and equates to a 4% rise in total FSA costs, even if no other investments were made.
The additional increase reflects primarily the investment necessary for Solvency 2, and a further increase in supervisory capability. In the light of the experience of the last 12 months, this extra investment is clearly required to supervise the very largest firms.