On 25 March 2014, the UK's National Audit Office ("NAO") published its first statutory audit report of the Financial Conduct Authority ("FCA") and the Prudential Regulation Authority ("PRA"). The report examines the progress made by the regulators in developing and implementing their regulatory approaches. The report concludes that the two regulators cost more than the Financial Services Authority (the "FSA"). The 24% increase in cost is attributed to the difference in regulatory approach adopted by the new regulators and the cost of running two regulators instead of one. The NAO recommends that the regulators should (i) develop more structured approaches to evaluation of their work; (ii) establish a body of evidence from experience of managing conflicts between conduct and prudential regulation; (iii) review the effect of staff turnover rates in practice; (iv) evaluate the impact of the new regular data requests on firms; and (v) clearly define the outcomes sought and measures of performance. Clarification is also needed over how the PRA would access the information necessary to assess its economy and effectiveness.
The NAO report is available at: http://www.nao.org.uk/wp-content/uploads/2015/03/Regulating-financial-services.pdf.
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