Counting the cost of the regulator

There is always much talk and debate about the costs of regulation and the impact this has on firms’ business. Some costs however are clearer than others and the direct cost of financing the regulator’s work – which unlike other UK regulators is financed wholly by regulated firms – is the most transparent.

Regulated firms are divided over the Financial Services Authority’s (FSA) decision to move away from prescriptive rules to a system of principles-led supervision with those welcoming the lighter touch approach balanced by those, mainly smaller firms, which prefer to handle rules in a tick-box way leaving little room for uncertainty. Either way, the trend towards principles-based regulation is only part of the picture, sharing the frame with specific rules.