The chair of the Financial Services Authority has slammed the EU over the cost of IT needed to support compliance with a new regulatory directive.
Callum McCarthy told the FSA’s annual public meeting that it was “far from clear” that the benefits of the new Market in Financial Instruments Directive (MiFID) would outweigh its costs.
MiFID is set to change reporting requirements for financial services firms, and financial analyst Celent has estimated that these companies will need to spend E1bn on IT to achieve compliance.
But Mr McCarthy said it was “deeply unsatisfactory” that UK financial services firms faced major changes and associated costs “for an initiative which has been subject to no comprehensive EU cost-benefit analysis”.
“That kind of approach to policy-making cannot be sensible,” he said, adding that the FSA planned to consult on MiFID implementation in November and would assess the costs and benefits of changes to FSA rules brought about by the directive.
Mr McCarthy said: “It is already clear that the MiFID changes will impose significant costs on the UK market, including for example, through systems changes and IT upgrades. Industry is understandably concerned about the potential scale of these costs – and I share those worries. It is far from clear that the benefits to the UK will outweigh the costs.”