There is "a pervasive mood of discontent" in the City of London with the Financial Services Authority, its new regulator, over what is seen as its heavy-handed approach to regulating the UK finance business.

This report, based on interviews with some 70 financial institutions, says that people find the FSA "bureaucratic, intrusive and insensitive", and this is breeding concern that the City could lose the light regulatory touch which has always been one of its strengths.