Advisers should pay no more than 6 per cent of the guidance guarantee levy, as advisers will not be the main beneficiaries, with other fee blocks set to benefit three times more than advisers, Simplybiz said.
In July, the FCA published its consultation stating three possible ways in calculating the guidance levy.
Option one means that advisers will be paying 30 per cent of the levy, under option two everyone pays an equal 20 per cent, and under the third option the allocation will be “in line with consumers’ retirement choices”, taking into account the significance that various financial products and services play in consumers’ retirement choices.
Responding to the consultation, Ken Davy, Simplybiz chairman, said that the “adviser fee-block proportion should more properly be of the order of 6 per cent or less, rather than the 20 per cent or 30 per cent suggested”.
Mr Davy added that the benefit to advisers from the guidance guarantee is likely to be approximately £12.5m per year. However, he said this is not a cumulative benefit.
For the other fee-blocks, the benefit is circa £39m a year on a cumulative basis, Mr Davy said.
He said: “Therefore, within just five years, the insurers and money managers will have received a total of approximately £549m, compared to the advisers total of c£62m, and be receiving an annual income 14 times greater than that of advisers.”
Mr Davy added that the gap highlighted and its “inequality” will continue to worsen year by year on a cumulative basis “to the increasing disadvantage of advisers”.
He said: “We have seen with the Investors Compensation Scheme Levy, which continues to place a wholly unfair burden on advisers, how the unintended consequences of regulatory action can damage the sector.
“We are also very concerned that the guidance levy is handing a blank cheque to the organisations tasked to deliver the guidance.
“We are not against the guidance service itself; however it is vital that the costs are shared equitably and properly controlled.”
Earlier today, Zurich raised concerns over financial advisers having to pay part of the levy for the government’s proposed at-retirement ‘guidance guarantee’, suggesting that the contributions of advisory firms should be capped.
Last week, the Association of Professional Advisers warned that a levy to fund the guidance guarantee would be “unfair to advisers and consumers” and could swallow up to 5 per cent of advice firms’ retained profits.
Apfa has called for changes to the proposals for a levy to be based instead on firm turnover.
