Treasury select committee chair Andrew Tyrie has called on the Financial Conduct Authority (FCA) not to increase its costs without clearly explaining why to MPs.
In a letter to FCA chairman John Girrith-Jones, Tyrie criticised the regulator for not paying enough attention to the Parliamentary Commission on Banking Standards’ (PCBS) recommendation that the FCA should become a ‘smaller, more focused organisation’.
Tyrie called the FCA board’s explanation of its decision to increase costs in 2015/16 ‘insubstantial’ and said that fee payers, as well as MPs and the public, needed a ‘higher level of transparency’ from the FCA’s accounts.
‘Regulation is sometimes mistakenly taken to be a free good,’ Tyrie (pictured) said. ‘Consumers end up picking up the tab, either in higher prices or reduced services, or both. So the FCA’s costs need to be kept in check.
‘Parliament will expect the FCA to be more transparent about how it attempts to meet the PCBS’ recommendation in future. Regulators should not be exempt from the need to obtain better value for money’.
Tyrie called on Griffith-Jones to clearly set out how much the FCA spent on covering new areas of regulation as well as its existing work.
In Griffith-Jones’ correspondence with Tyrie, the FCA chair acknowledged that ‘the underlying picture is one of modest increases’, but noted that the FCA kept the fees it raised for costs inherited from predecessor regulator the Financial Services Authority constant between the 2013/14 and 2014/15 financial years.
To carry out its statutory objectives, Griffith-Jones said that an increase was required in 2015/16, while it also upgraded its systems and technology.
Without its new consumer credit responsibilities, for 2016/17, the FCA held its annual funding requirement steady.
‘The board and I are focused on minimising the cost of resources used by the FCA while having regard for the effect on the quality of our work; we are absolutely clear that any increase in costs must be fully justified,’ Griffith-Jones said.