On 6 February 2024, the Financial Conduct Authority (FCA) published a document outlining its approach to analysing the costs and benefits of its policies.

The document explains that identifying the cost of an intervention, who will pay and who will benefit (and how by how much) provides an empirical weighting that enables it to assess more clearly whether to proceed with proposed policies and what to prioritise.

The FCA achieves this through cost benefit analyses (CBA), which it uses to help ensure its rule-making powers are used to tackle the biggest issues and deliver the greatest benefits in the most proportionate way. It publishes its approach to CBA in order to be clear about why, when and how it uses CBA in developing policy intervention. The FCA last published its approach to CBA in 2018 and the new publication provides an update, explains the core principles of its methodology, expands on how the FCA estimates benefits, and updates its standardised cost model.

Under the Financial Services and Markets Act 2023, the FCA is required to establish an independent CBA Panel and to release a Statement of Policy relative to CBA after consultation with the Panel. The CBA Panel will be established later in 2024 and will be consulted on the approach set out in the document, alongside the other elements that will eventually form the published Statement of Policy.

The FCA also updated its  ‘Measuring our impact before we intervene’ webpage to include the new group of publications:

• How the FCA analyses the cost and benefits of its policies
• When and how the FCA uses field trials
• Occasional Paper No.39: Estimating the benefits of interventions that affect consumer behaviour