It is not surprising that the costs of regulation are particularly under the spotlight

Sir Howard Davies, FSA chairman

The findings are from a survey of 1600 senior executives by the Financial Services Practitioner panel, a body set up to monitor the progress of the Financial Services Authority (FSA).

Expensive regulations were one of the biggest grumbles among financial services firms - along with the clarity and consistency of the guidance provided by the FSA.

In one of the most damming criticisms, less than half of those who took part in the survey felt the regulator had a good understanding of their business.

Too much power?

The survey's publication coincides with the first anniversary of the FSA's new powers on 1 December 2001.

A year ago the FSA gained new powers and became a "super-regulator" for the financial services industry, combining the work previously done by numerous self-regulating bodies.

People were twice as likely to say that things had got worse rather than better, the report said.

There were also continuing concerns abut the powers and accountability of the FSA, and its independence form government.

In addition, the industry said it felt more strongly "that the burden of regulation on the industry is too great, and the majority think too much weight is being given to the interest of consumers".

Good for the industry as a whole

Sir Howard Davies, the FSA chairman, defended the regulator's actions.

He said: "The FSA was officially launched at a time when the profitability of individual firms was under pressure.

"Against that background, it is not surprising that the costs of regulation are particularly under the spotlight. We will use the findings in this report to help us make our regime more cost-effective in the future."

The report, however, showed that overall the new regulatory regime was beneficial to the industry as a whole.