Setting up the Prudential Regulation Authority (PRA) could cost up to £150m, the Financial Services Authority (FSA) said today.
In its annual 2011/12 report published today, the watchdog said creating the PRA - the FSA successor body responsible for the regulation of banks and insurers - will cost the Bank of England and the FSA in the region of £115m to £150m.
The PRA, subsidiary of the Bank of England, is one half of the new twin peaks regulatory regime which, along with the Financial Conduct Authority, is set to replace the FSA early next year.
Writing in today's report, outgoing FSA chief executive Hector Sants (pictured) said the FSA has made "considerable progress" in developing the twin peaks regime. This includes the establishment of a twin peaks regulatory model within the FSA in April which Sants described as a "major milestone".
"The move to twin peaks is an opportunity to drive home and further embed the move to forward-looking, proactive, judgement-based supervision," he said. "It has crystallised the change from the old style reactive approach to the new style proactive approach."
Sants added the programme to complete the transition to the new regulatory structure remains on course.
The FSA also said it incurred about £11.4m implementing the regulatory reform programme during the year - compared to planned costs of £10.9m. It said the overspend was a consequence of implementing the twin peaks regime within the FSA and IT costs.
Elsewhere the report revealed FSA staff turnover reached 11.8% during the 2011/12 financial year, something it blamed on a two-year pay freeze and a recovery in the financial markets. Turnover reduced to "more normal levels" of 9.8% by the end of March, it added.
