The Financial Services Authority's move to principles-based regulation will cost £50 million - with regulated firms picking up the bill - and will result in the loss of 300 jobs at the watchdog.
In its annual business plan the UK regulator says it will need £50m over the next three years to improve the "effectiveness" of its staff and support the move from prescriptive rules to more principles based regulation.
As part of this effort the FSA says it plans to reduce its net headcount by around 300 over the next three years, although it does intend to recruit 40 to 50 new employees.
Out-going FSA CEO John Tiner told FT reporters that the FSA needed staff who can make judgments, do business analysis and "have grown-up conversations with chief executives and boards, rather than people who can read a rule and tick a box".
The £50m cost will be spread over ten years in the fees the FSA receives from regulated firms. Along with other new spending, the FSA will see its budget for 2007-08 increase by 10.1% to £301.7m. This will result in a 9.5% hike in fees for regulated firms.
The major components of the increase are a £7.4m rise in spending on financial education and capability, taking the total budget for this to £17.1 million, and an up-front £11.3m spend on IT.
Says Tiner: "Those who pay our fees will benefit from having a regulatory system which focuses increasingly on achieving desired outcomes and from dealing with a more efficient, more responsive, better-focused organisation."
Read the FSA's business plan here:
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