Regulatory changes will cost UK government £50 million
At a time when the UK authorities are slashing public budgets in almost every department of the government, it has been revealed that the abolishment of the FSA and the transfer of regulatory power back to the Bank of England will cost the UK government £50 million. There will be a mountain of legal work and reorganising for the government to do in a relatively short space of time which is predominantly the reason why a figure of £50 million has been suggested. However, are taxpayers getting value for money?
If you had asked the question 12 months ago many people may well have been in favour of scrapping the FSA and moving power back to the Bank of England. However, there is no doubt that there has been a significant increase in the number of successful prosecutions by the FSA and the regulator does seem to have more control of the banking sector than ever before. Against this background, there is serious doubt as to whether a £50 million cost will give UK consumers, UK businesses and investors anymore reassurance than they have today.
While we will see the potential for the changes in the longer term there may well be a short-term vacuum while power is transferred from the FSA back to the Bank of England, making Mervyn King the "kingmaker" in the UK regulatory setup.
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