The Financial Services Authority publishes Occasional Paper:
16/09/1999
The Financial Services Authority (the FSA) today publishes the third in its series of Occasional Papers. The paper "Cost-Benefit Analysis in Financial Regulation" by Isaac Alfon and Peter Andrews, both of the FSAs Central Policy Unit, examines general issues associated with cost-benefit analysis (CBA) and discusses the procedures the FSA is putting in place to publish CBAs of proposed regulatory provisions and changes.
The paper notes that:
the FSA is now using CBA in line with the requirements of the Financial Services and Markets Bill, in particular by making CBA an intrinsic part of its policy making process.
the FSAs approach to CBA is a pragmatic comparison of regulatory options, with explicit analysis of the likely costs and benefits of proposed regulatory requirements designed to enable the FSA to formulate more proportionate measures than would otherwise be the case.
the FSA plans to undertake specific projects to assess the overall costs and benefits of financial regulation in the expectation that this work will produce valuable information for the direction of future policy.
Notes for editors
The paper is written in a personal capacity by the authors and the views expressed are not necessarily those of the FSA.
The Occasional Papers series, which covers financial regulation and extends across economics and other disciplines, is part of the FSAs commitment to encouraging debate among academics, practitioners and policy makers.
The Financial Services and Markets Bill currently before Parliament will require the FSA to have regard to the economic impact of the provisions it makes and to publish a cost-benefit analysis of proposed rules, evidential provisions or standing guidance of general application to firms.
The two previous papers in the Occasional Series are "The Economic Rationale for Financial Regulation" by Professor David Llewellyn of Loughborough University published on 20 April 1999 and "The Rationale for a Single National Financial Services Regulator" by Clive Briault, Director of the FSAs Central Policy Unit, published on 18 May 1999.
Copies of all three occasional papers are available from FSA publications and can be found on this website: http://www.fsa.gov.uk/pubs/policy.htm