HISTORIC PRESS RELEASE : Helen Liddell announces proposals to deliver cost-effective regulation [January 1998]

The press release issued by HM Treasury on 14 January 1998.

The Financial Services Authority (FSA) must be cost effective in order to protect the consumers’ purse and the competitiveness of the UK financial services industry, and that goes hand in hand with providing effective protection for the consumer, the Economic Secretary Helen Liddell said today.

Addressing the Law Society Commerce and Industry Group the Minister said that the FSA will be required to publish its proposed budget for consultation at the same time as it publishes its proposals for fees.She said:

“Not only must the FSA use its resources effectively, it must also show the public and the industry that it is doing so.

“After all, the costs of regulation are met by the firms under regulation. This means they are ultimately passed to consumers in the form of higher charges or lower  returns. Firms themselves need to know that the UK will remain a competitive place to do business.”

The Minister also announced that where the FSA introduces a new rule or change to an existing one, it must consult the public and practitioners by publishing the proposals. Their proposals will include estimates of costs and benefits of the proposals and other options. Mrs Liddell said:

“This statutory requirement to publish cost-benefit analysis will allow much more focussed consultation than sometimes happens now. Indeed firms will be able to challenge the FSA’s estimates if they believe they are inaccurate.”

The Minister stressed this goes well beyond the current requirement upon the Self-Regulatory Organisations (SROs) to take account of the costs of compliance.