The Financial Services Authority (FSA), the UK's financial watchdog, has admitted that the costs of compliance have risen since it gained new power under the Financial Services and Markets Act in November 2001.

The FSA commissioned a report by Europe Economics, and independent consultancy, to survey the costs for financial firms. Half of the firms questioned estimated that the incremental compliance costs of FSA regulation added up to 2% to operating costs. A third estimated the increase was between 2% and 10%.