The director general of the Association of Professional Financial Advisers, said: “There are a number of steps the FCA needs to seriously consider.
“It should find a way of streamlining the data it asks advisers to provide, and give them more time to provide it.
“The FCA must simplify and consolidate the sheer amount of information advisers have to get through to be compliant, through the handbook, seminars and elsewhere. We also need to see clear action on introducing a long-stop, to help reduce the cost of PI insurance.”
He said that Apfa had written to the FCA with a “list of areas to address”, adding: “Good compliance is essential for the industry and for consumers, but the overwhelming feeling at present is that the regulatory burden on advisers is bloated, unnecessarily onerous and potentially damaging to the future health of firms”.
A spokesman for the FCA said: “Many advisers will pay us less this year, under the fee structure we have proposed. This is in addition to the firms, some 42 per cent of all those we regulate, who pay the minimum fee, which we intend to freeze for the fifth year.
“We have also published a data strategy setting out why and how we intend to collect data, ensuring what we ask for is necessary and useful so the impact of firms is properly managed.
“We are always conscious of the cost of regulation, which is why we work to ensure our requirements are proportionate.”
In response, Mr Hannant said: “These in-depth interviews gave us a representative view of how advisers feel about the cost of regulation, and of the scale of those costs.
“It was particularly important for us to understand the views of small firms, who are bearing a disproportionately large burden compared to their larger peers. Our estimate for the overall cost of regulation was calculated based on FCA figures on the size of the industry.”
Industry view
Dave Chessell, chief commercial officer for software provider Intelliflo, said: “Apfa’s research shows that the cost of regulation can be immense, particularly for small firms.
“With recent changes across the industry, advisers are being increasingly called upon to provide proof of regulatory compliance. This is without doubt a time-consuming, and as a result a costly, consequence of the new regulation.”
Background
The comments followed publication of Apfa’s six-page report, The Cost of Regulation 2013, from the trade body, which conducted in-depth research among 74 member firms. This revealed that the cost of regulation for advisers in the UK was nearly £500m - equating to roughly £170 a year for each client.
