Dear Listener

The cost of the Financial Services Authority – the City watchdog – reached almost half a billion pounds in the year 2010/11 following a 12.5% rise in its spending. Its costs have been pushed up to £475 million partly because it is employing more staff and paying them more. While staff numbers rose by 339 to 3291, an increase of 11.5%, gross salaries went up by 15%. Average pay and taxable benefits per employee was £68,277, up 3.3% from the average of £66,125 paid the year before. Chief executive Hector Sants saw his pay rise by 4.3% to £808,810 and Chairman Adair Turner was paid £500,276, a 2.4% increase. Altogether the pay for directors rose to just over £3 million, an increase of 8.6%.

The FSA explains the rise by saying it is doing more and has to pay more to recruit and retain the quality of employee it needs. Its budget comes from fees levied on all firms in the financial services industry. Those fees will be helped a little by the extra money raised in fines. That nearly trebled to £91.2 million compared with £33.5m in 2009/10. The fines are kept by the FSA and used to reduce the annual levy on all financial firms. So even the biggest offenders – such as Barclays which was fined £7.7 million in January for poor investment sales advice – will get some of that back in reduced fees.

The FSA will not be with us much longer. Most of its consumer functions will be replaced in a year or two by the new Financial Conduct Authority. It will have more powers to prevent mis-selling. They will include the power: to ban or amend products before they are marketed; and to reveal the names of firms it is investigating before the process is complete. It will also get greater powers to deal with misleading financial adverts and promotions.

Despite all this regulation, a UK bank did go bust this week leaving some savers out of pocket. Southsea Mortgage and Investment Company went into liquidation on 16 June. About 270 people had trusted their savings to it with an average deposit of around £27,000. That is well below the £85,000 limit of the deposit guarantee and almost all will get their money back in full, normally within seven days though a few might have to wait up to 20 days. The FSCS says that 14 savers had more than £85,000 in the bank. Their compensation will be limited to that amount but the FSCS will then register as a creditor on their behalf and share out any further money distributed by the liquidator.

***IN MONEY BOX THIS WEEK***

Has the cheque been saved? The industry plans to get rid of them by October 2018 if there is an acceptable alternative. But this week Treasury Minister Mark Hoban said the Government might intervene to save cheques and at least one bank has hinted it might break ranks. We talk to the key players.

The excess charged on insurance policies – the amount you pay if you make a claim – is rising steeply. Why? And can we do anything about it?

If you buy goods online from Next you may end up with a credit account at a high interest rate whether you want it or not. We examine what is going on.

And public sector pensions – work longer, pay more and get less. But just how much longer, how much more and how much less? And are the latest changes proposed by Treasury Minister Danny Alexander fair?

As ever, there may be more, there may be less. Find out what is in and what is out by listening on Saturday just after noon or the repeat on Sunday at 9pm or any time to the podcast www.bbc.co.uk/podcasts/series/moneybox. Check out our website www.bbc.co.uk/moneybox to follow links, download transcripts, send us stories or ideas you want us to look into and Have Your Say on one of our stories still be decided.

Money Box Live on Wednesday takes your questions on banking – charges, convenience, service, competition and interest rates. Call 03700 100 444 when lines open at 1.30pm on Wednesday, or send an e-mail using the link through the website www.bbc.co.uk/moneybox

This newsletter is available at bbc.co.uk/moneybox/newsletter around the time it hits your inbox (tell your friends who don’t subscribe) and you can also join more than 8200 people who follow me on Twitter to read my random but timely thoughts on money – and a few other things – whenever I’m awake at  twitter.com/paullewismoney.

Best wishes,

Paul

PS Don’t forget the trail for the programme on BBC1 Breakfast just after 0845. And I am back on breakfast on Thursday around 0640 and around 0820 (though those times are very subject to change) with another story and answering emails from viewers.

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