Tenet: Government must review 'uncontrollable' cost of regulation

The government must conduct a full review of the 'uncontrollable' cost of regulation and the impact it is having on businesses, according to Tenet.

The support services provider and network said the Financial Services Authority's (FSA) decision to increase its budget from £500.5m in 2011/12 to £578.4m for 2012/13 had caused "consternation" within an industry already affected by regulatory changes.

Keith Richards, distribution and development director, said: "At a time when the government is preaching austerity and implementing major spending cuts, the FSA seems entirely exempt?

"For while the industry has to foot the bill, it is the consumer who ultimately pays, as these ever-increasing costs will of course be passed on and impact accessibility to advice."

The company said there was a need for a "fundamental re-appraisal" of the cost of the FSA and Financial Ombudsman Service and Richards added the industry should be "unified in seeking government intervention".

"Hector Sants recently stated that much of the cost increase is due to regulatory change, but wasn't it the regulator who instigated much of this change and therefore could have avoided such an unacceptable price hike?" asked Richards.

"How can the regulator work in such isolation and be so out of touch with reality or the consequences of its actions?"

As part of its lobbying efforts on the Financial Services Bill, AIFA has been calling on politicians to introduce a cap on future fee increases for the regulator, suggesting a figure of CPI+1%.

In a memo to MPs, it said: "AIFA is concerned that the increasing cost burdens will lead to an increasing number of advisers to leave the industry altogether.

"This will result in fewer opportunities for consumers to access financial advice and undermine the government's wider public policy agenda to help consumers re-engage with their long-term financial well-being."