The FSA has said the cost of establishing internal professional standards could be more than £5m.
As set out in today's professionalism consultation paper, the FSA says initial costs of establishing professional standards now stands at between £3.9m to £5.1m.
In its December paper, the regulator said initial costs of recruiting and training staff and running a project team would amount to between £2.3-2.5m. This amount remains unchanged.
But it says the one-off cost of establishing an IT system has increased from an initial estimate of £0.5m-1m to a range of £1.2m to £2.2m.
Additionally, the regulator says "the cost of each notification by firms of various information on each adviser is expected to be around £7.50" - equating to one-off costs of approximately £360,000.
As a result, total initial costs have increased to a range of between £3.9m to £5.1m.
The regulator also confirmed ongoing costs of increased policy, supervisory and enforcement activity will amount to to £3.5m a year - as set out in its December paper.
In that paper, the FSA said one benefit of an internal professional standards body was its cost-effectiveness. The regulator said although the one-off costs of establishing a separate organisation would be "comparable" to an internal body, ongoing costs would be approximately £5m a year.
So the initial costs of establishing an internal body could now be as high as the annual ongoing costs of setting up an independent organisation.
The £1.2 - £2.2m IT system is being developed in order to monitor the professional standard of advisers through data submitted from firms and collected via a notification process.
Data collected will include the qualification status of each adviser, the date the adviser started advising, FSA individual reference number and the name of the accredited body.
The FSA says the cost to firms will be minimal given the fact they will already hold the relevant data.
"This data, along with other insights, such as the results of outcome testing, will allow us to identify issues at an individual adviser level and, over time, to build a profile of individual advisers," it says.
The FSA has also it will be employing more staff as it increases its focus on professional standards - regardless of whether an internal or external model is chosen.
"We will therefore enhance our capability with additional staff, focusing on professional standards of advisers throughout the main functions of the FSA, from policy making to supervision and enforcement," it said in today's paper.
"We will apply our experience of monitoring large numbers of small firms to the task of overseeing the large number of individual advisers."
The consultation will close on 24 September 2010, with a policy statement due to be published in December 2010.
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