The Association of Independent Financial Advisers (AIFA) today welcomed the move. AIFA has campaigned for NAO scrutiny of FSA for several years, believing it is critical that the statutory body demonstrates value for money and delivers the right outcomes for consumers and the financial services industry.
Chris Cummings, Director General, AIFA, said: "With a budget that has rocketed to nearly half a billion pounds (£437 million) a year, it's critical that the FSA is held to account. We have always said that, as a statutory body, FSA must be more transparent and clearly demonstrate value for money. The appointment of the NAO ensures that the Public Accounts Committee can fully scrutinise FSA's performance on a regular basis.
"NAO last conducted a one off review of FSA in 2007, following calls from AIFA and others in the industry. At that time, the NAO recognised the progress FSA had made since its inception in 2002, but stated that FSA had to do more to demonstrate its impact and provide a clearer indication of what its different activities cost. These points still hold true today.
"Since the FSA's creation, we've moved full circle from rules based regulation to principles, and then back to prescriptive regulation yet again. Not to mention the increasing volume and influence of initiatives coming out of Europe, which often supersede FSA regulation.
"Lessons must be learned about the relative effectiveness of regulatory interventions. We can not just have change for change's sake. There must be a clear and demonstrable benefit to consumers and industry. The NAO's appointment is a big step towards achieving this goal."
The FSA is currently conducting the Retail Distribution Review (RDR) as part of its retail market strategy. In AIFA's response to the latest stage of the RDR, it called on FSA to commit to a date for a Post Implementation Review, inviting the NAO to conduct a value for money audit of the RDR.
