The average waiting time to receive FSA authorisation has almost doubled in the last year, according to figures obtained via a Freedom of Information request.
In Q2, it took 21.1 weeks for financial services firms to get agreement from the FSA, up from 19.5 weeks in Q1, research from Reynolds Porter Chamberlain LLP (RPC) has shown.
According to data obtained by London-based law firm Reynolds Porter Chamberlain (RPC), financial services firms waited more than 21 weeks for corporate authorisation in Q2 this year, compared to 12.2 weeks in the same period last year.
There was an 8% jump from Q1 2010, when waiting times averaged 19.5 weeks, to Q2, when the figures say 21.1 weeks.
Meanwhile, since Q1 2007, the waiting time has increased some 167%, from 7.5 weeks.
Jonathan Davies, Regulatory Partner at RPC, says: "The question in my mind is whether the FSA is taking longer to authorise firms because it is being more rigorous or whether it is because it is haemorrhaging its more experienced staff and cannot keep up with the workload.
"If it is that they are being more rigorous, what does that say about the FSA's approach to authorisation just a year ago?
"If the FSA lacks the resources to cope effectively with requests for authorisation then that will raise major concerns in the financial services sector."
The FSA says it has "absolutely" increased the intensity with which it scrutinises authorisations but says its current estimates (six months for 'complete' applications and 12 months otherwise) have not changed.
"Authorisation timescales are driven by factors including the complexity of the business, the number of individuals needing approval and the level of accuracy with which firms, or their advisers, complete an application," it says in a statement.
RPC's Davies also expressed surprise that the increased average waiting times come despite fewer applications.
While there were 2,193 applications in 2006/7, there were just 1,375 authorisation applications in 2008/9 and 1,520 in 2009/10.
He says: "These delays risk reducing competition and harming the City's international competitiveness.
"Is the legacy of the credit crunch really going to be that consumers suffer because of a lack of competition between financial service providers?"
The problems of authorisation waiting times has recently been brought into the spotlight by the continuing saga surrounding ex-Park Row IFAs.
After the firm was declared insolvent in November 2009 following pension switching advice failings, dozens of IFAs had their permissions revoked.
Many have since been left in limbo as they wait for the FSA to investigate the failings, meaning they have been limited in the work they can do with new employers.
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