New rules mean major IT spend

A proposed regulation to make financial products easier to understand is set to cost the industry tens of millions of pounds in...

A proposed regulation to make financial products easier to understand is set to cost the industry tens of millions of pounds in IT compliance costs, it has emerged.

A consultation paper by City watchdog the Financial Services Authority aims to make complex financial products easier to understand by requiring firms to provide customers with extra documentary information.

This will require financial firms to update their policy data and revamp their back- and front-office systems, IT chiefs claimed.

The FSA estimated that the total compliance cost for the financial services industry will be about £110m - the bulk of which will be IT related. IT costs will include changing printing instructions and code and collecting extra information from databases.

The CP 170 regulation will not just require extra words in policy documentation, said Margaret Smith, director of business delivery and technology at Legal & General. "It is about how we present valuations and involves quite complex calculations. There will have to be major changes and enhancements to IT systems."

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