WIREDGOV

The Financial Services Authority (FSA) yesterday published its Business Plan for 2009/10.  The plan sets out the FSA's programme of work for the year ahead to address the risks highlighted by the Financial Risk Outlook, published on 9 February.

The document outlines the FSA’s priorities and specific initiatives for the year ahead, which reflect the continuing difficulties and challenges facing the financial services industry.

This will be a very difficult year for financial markets and their users.  Accordingly, the FSA will focus on ensuring firms are soundly run and in particular that they adjust their business models to ensure they can remain well capitalised and securely funded.  In carrying out its consumer mandate, the FSA will concentrate its resources on helping people cope with the economic downturn and maintaining pressure on firms to treat customers fairly.

As well as addressing these current risks, the FSA will play a full role in modernising the global regulatory framework.  This will involve taking forward the agenda that will be laid out in an FSA Discussion Paper in March.  Finally and crucially the FSA will complete the planned programme of improvements to its supervisory processes.

Hector Sants, chief executive of the FSA, said:

“The financial services industry is facing unprecedented challenges, which look set to continue in 2009.  The FSA has a central part to play in addressing these challenges and providing leadership on the future shape of regulation.  We will be focused on ensuring firms are soundly run in these difficult times and consumers are protected. 

“We will need additional financial resources to meet these demanding priorities for the coming year.  This will mean higher fees for regulated firms, although we have been careful to ensure, as far as possible, that firms requiring the most regulatory work and engagement pay proportionately.  There will be no increase in fees for the smallest firms, and many of them will actually experience a fee reduction.”

The FSA’s budget of £415m for 2009/10 reflects the cost of taking these priorities forward.  To fund its proposed plan of work, the FSA will need to increase the amount it raises from firms (the Annual Funding Requirement) by £117m.  The largest component of this increase, approximately £70m, is due to the cost of embedding and delivering higher quality supervision, especially of higher impact firms.  To support the enhancement of its supervisory process, the FSA will also be investing an additional £12m in technology and property infrastructure.

However, as in previous years, proposed fees reflect the amount of resource that the FSA plans to dedicate to different types of firms in the coming year – whereas the largest firms in areas needing most regulatory attention and supervisory activity will be subject to higher fees, over 10,000 small firms will pay lower fees than last year.

Published alongside the Business Plan, the 2009/10 consultation paper on regulatory fees and levies explains how the FSA proposes to raise the annual funding requirement from fee payers, and provides an opportunity for comment.

Notes for editors

1. The Business Plan 2009/10 has been published today and is available on the FSA website.
2. The Fees Consultation Paper (CP09/7), also published today, sets out the FSA’s fee proposals for 2000/10 for the firms it regulates. 
3. Firms can get an indication of the FSA, Financial Ombudsman Service (FOS) and Financial Services Compensation Scheme (FSCS) fees and levies they may actually pay in 2009/10 by using the Fee Calculator on the FSA website, and will be able to make comparisons with previous years' rates.
4. The FSA published its Financial Risk Outlook on 9 February.
5. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
6. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.