PS25/1 Statement of policy on our cost benefit analysis framework

UPDATED 11/06/2025

The Financial Services and Markets Act 2023 (FSMA 2023) introduced additional cost benefit analysis (CBA) accountability requirements (building on pre-existing ones in FSBRA 2013) on the PSR. Among these is the publication of a statement of policy on our use of CBAs. Our statement of policy on our CBA framework builds on and replaces our previous draft statement which we published for consultation in September 2024.

The statement describes our approach to CBA which we consider to be part of our robust consideration of economic evidence and an important component of delivering outcomes-focused policy. CBAs are an important tool that can help us consider the likely impacts of our proposed interventions.

We would like to thank stakeholders who contributed to the consultation and wider development of our framework.

CBA Panel report response

The FCA’s Cost Benefit Analysis (CBA) Panel has a statutory role in providing comment and recommendations on our CBAs. On 10 January, it published its first interim annual report.

In it, the Panel shared some initial feedback on its engagement with us so far, as well as on our statement of policy on CBAs, which we welcomed.

The Panel described our overall approach to CBAs as ‘well structured, clearly explained, comprehensive, and easy to understand’. It recommended we ‘develop a clear policy on how its CBA reflects its various statutory objectives and regulatory principles’, which we will take forward.

In our final statement of policy on CBA, published in January 2025, we indicated that we would aim to keep the core statement of policy principles-based and suitably stable over time to provide clarity, but would publish supplementary material in response to stakeholder feedback (including Panel recommendations).

In line with that, we have published Supplementary Note A: Statutory objectives and regulatory principles as a supplementary file to our statement of policy.

Building on the principles in our statement of policy, the supplementary note clarifies that CBAs help us make effective decisions by assessing the likely economic impacts of potential policy interventions.

In doing so, CBAs will consider impacts on our statutory objectives or regulatory principles (including in relation to supporting sustainable economic growth) where an impact on service user outcomes or welfare can be identified.

But CBAs do not, on their own, provide justification for our decisions and are usually not where we set out how we trade off (or weigh up) different statutory objectives, regulatory principles or the wider strategic context.

We would like to thank the Panel for its advice and feedback, both within the annual report and engagement sessions on individual CBAs so far.

This advice has been helpful and pragmatic. And we are clear that future engagement with the Panel will help strengthen our CBA approach as we continue to develop it.