On 14th January, at a conference jointly organised by the Law
Society's Commerce & Industry Group and Cameron McKenna, Helen
Liddell, Economic Secretary to the Treasury, reinforced the
Government's commitment that the Financial Services Authority will
be cost effective, and that this will not just be an aspiration but
a statutory requirement.
Over 150 assembled guests listened to Ms Liddell as
she said that "being efficient and economic, and having costs
proportionate to its benefits" would be a specific statutory
objective of the FSA. The FSA will be required to report on its
cost effectiveness to the Treasury, and publish both its fees and
accounts at the same time.
In addition, Ms Liddell explained that when the FSA
introduces a new rule "it will have to consult both the public and
practitioners, and in all cases carry out a statutory cost/benefit
analysis". It would be open to regulated firms to challenge the
FSA's estimates if they felt that they were unrealistic.
Ms Liddell said that the definition of investment business would be
clarified to avoid the need for there to be so many precautionary
requests for authorisation.
Ms Liddell explained that the importance which the
Government attached to the reform of financial services regulation
could be seen from the fact that the Treasury had managed to get
advance clearance to draft the Financial Services Reform Bill,
which is expected to be published this spring, even though it is
not intended that it become law until 1999.
Ms Liddell concluded with a plea to the industry to
be more involved in the shaping of the future of financial services
regulation in the coming months. She explained that "effective
regulation is the key to competitive advantage" and "if you have a
technical issue, you should talk to the Treasury about it now. I
want to see a free exchange of views in order that you, the
industry, can guide us." She ended with the challenge that if those
assembled wanted "to see the UK with a world leading regulator,
then help us to create it and speak now or forever hold your