FSA's spending to rocket to £266m

THE Financial Services Authority is to boost its budget by an inflation-busting 6.5%, taking its forecast spending for the 12 months to 31 March 2006 to £266.6m.

The City watchdog said the £16.3m increase in planned annual spending was needed to help fund its additional remit to supervise the general insurance sector and mortgage providers - responsibilities it says encompass a further 14,000 companies.

It will overspend on its £245.6m budget for 2005 by almost £5m after fees paid to lawyers soared to £7.9m, almost double last year's bill.

While small firms are expected to contribute fee increases to the FSA in line with the 3.5% rise in the Retail Price Index, larger firms will pay much more.

Hardest hit will be large fund managers. They face a 120% increase - in part to ensure that the recently agreed split-capital trusts scandal compensation deal is fully funded.

Large general insurers and life insurers face rises of 13.9% and 17.6% respectively.