Chris Hannant, director general of the Association of Professional Financial Advisers, has claimed a major victory for the trade body and others involved negotiations for a fairer distribution of regulatory costs, predicting advisers’ Money Advice Service levy is set to be more than halved.
In the second part of an exclusive video interview with FTAdviser’s Emma Ann Hughes, Mr Hannant said: “On fees, we have been part of industry negotiations on Money Advice Service fees and I would expect that they will fall to under £2m this year for the adviser community whereas they were at £4.5m just two years ago.
In January 2013 discussions begain on a new funding model for Mas, which at the time was said to have the potential to reduce the adviser levy by up to 93 per cent to a figure in the hundreds of thousands of pounds.
Late last year the FCA announced in a consultation it was redrawing the boundries on adviser fee blocks in an effort to establish a clearer link between how consumers use the Mas and the firms that pay for it, which would have seen the levy for advisers in the former A13 fee block that do not hold client assets rising by more than 60 per cent to £4.4m.
The paper also proposed merging this fee block with the A12 client asset-holding fee block to remove an ‘anomaly’ in the wider regulatory levies that as seen effectively lower-risk advisers paying higher fees as a proportion of income in recent years.
Mr Hannant said: “They (the Financial Conduct Authority) are currently consulting on redistribution across the A12 and A13 block, which should mean that most advisers who pay above the minimum fee should see a significant reduction in their fees.
“The regulator is looking at their whole fee model and we want to encourage them to go to something that would be much simpler and straight forward. The model that has been suggested is one that is based on turnover. We think that would significantly bring down adviser fees so we are supporting that.”
When asked did Apfa stand a good chance of winning the fight to overhaul regulatory fees for advisers, Mr Hannant said: “I don’t know. I know the regulator wants to move to a simpler basis but the problem with any fee calculation is zero sum gain.
“If someone is paying less that means someone else is paying more, which means those who are likely to have to pay more are likely to resist.”
Click here to watch the second part of the video interview.
To catch up on last week’s first instalment, click here.
