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Practical Cost-Benefit Analysis for Financial Regulators Version 1.1*

Financial Services Authority Central Policy
© June 2000

This document was prepared, originally in 1998, for the use of policy makers within the FSA.

Foreword to edition 1.0
To demonstrate our performance to Government, consumer groups and the industry, the FSA will have to meet the benchmarks set out in the document “Meeting Our Responsibilities”. As we said there, a key benchmark for judging our regulatory standards will be the balance struck between the interests of our stakeholders. Undertaking cost-benefit analysis, which will in any event be a statutory obligation under the terms of the new legislation, will help us to strike the right balance. And publishing the results will demonstrate to stakeholders that their views are given a fair hearing in the process of setting regulatory standards.

It is therefore clear that any cost-benefit work we undertake should be able to stand up to external as well as internal scrutiny. Thus, as part of our effort to become a world leading financial services regulator, we have developed and had validated externally an approach to cost-benefit analysis that can be applied systematically across our various activities and regulated businesses. The approach is set out in this new guide “Practical Cost-Benefit Analysis for Financial Regulators”, prepared in the Central Policy directorate. I believe that adherence to the principles, tools and techniques set out in this guide can contribute materially to the success of the FSA.

I can see that, given your heavy current workload, it might take time to acquire the necessary familiarity with cost-benefit analysis by ploughing unaided through a 40-page guide! To help, a training session has been developed. I urge you to take advantage of that. After the session, you should be in a position to use the

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