Speaking at the Financial Services Authority AGM on Thursday, Chairman Callum
McCarthy repeated concerns that the growing number of initiatives,
including Sarbanes-Oxley, Basel II and the new Directives
introduced under the Financial Services Action Plan, now represent
a “significant hazard” for the industry.
The cumulative cost and strain on management teams as a result
of the combined host of new initiatives is a serious problem, and
one that is often not balanced by those new initiatives meeting two
tests – that of market failure and a positive cost:benefit
analysis, said McCarthy.
He highlighted the Market in Financial Instruments Directive
(MiFID), which will allow investment firms, banks and exchanges to
provide their services across borders on the basis of their home
country authorisation, and will change the conduct of business
rules applicable to financial institutions.
Consulting group Celent puts the total technology spend
associated with MiFid at €1 billion among capital markets
participants. Celent expects total IT spending at European banks to
exceed over €45.7 billion in 2005.
McCarthy continued: “It is deeply unsatisfactory that UK
financial services firms face major changes, with the associated
costs, for an initiative which has been subject to no comprehensive
EU cost-benefit analysis to assess the specific contribution it
might make to unlocking the prize of a more integrated European
capital market."
He added: “That kind of approach to policy-making cannot be
sensible."
The FSA would, he said, try hard to support Internal Markets
Commissioner Charlie McCreevy in making “rigorous impact assessment
a vital determinant of EU legislation.”
