Advisers will be forced to contribute to the funding of the ‘guidance guarantee’ for prospective retirees from next April, however the equal weighting across all levy categories has been waived for the intermediaries, meaning their bill has effectively been halved.
In July, the Financial Conduct Authority proposed three options on how to allocate the levy across the five retirement guidance fee-blocks, including basing it on the total annual funding requirement allocated to the five fee-blocks, with each paying a 20 per cent proportion.
The regulator’s policy proposals for 2015/16 fees and levies, published today (27 November), revealed the FCA is proposing an equal allocation of the pensions guidance costs across the five fee-blocks, with a 50 per cent reduction for ‘A13’; covering most advisers.
Deposit acceptors, life insurers, portfolio managers, and managers of collective investment schemes or pension schemes will pay 22 per cent, while advisers will only pay 12 per cent of the total cost.
The regulator said an equal allocation across the four product provider fee blocks is a “reasonable starting position”, adding the discount to advisers is being given as firms will only benefit if consumers go on to seek financial advice.
The paper said: “However, the firms in the other four product provider fee-blocks will more likely benefit as the monies released through greater pension flexibility, if used for investment, will be distributed amongst them.
“The 50 per cent reduction in the allocation for A13 is intended to make an initial allowance for this difference. This level will be reviewed when the above data on consumer outcomes is available.”
The FCA dismissed the other two proposals, as there no current data available on what retirement financial products and services consumers will be choosing as a result of the pensions reforms, and also the AFR allocation is “not a reasonable proxy” for the “potential benefit”.
Additionally, small firms below a fee threshold of £100,000 will not be required to pay at all.
Elsewhere in its levy changes consultation, the regulator reviewed the way minimum annual fees are calculated and has confirmed the current £1,000 minimum for advisers will remain unchanged.
Any future changes to this will be consulted on as part of its annual March fees rates consultation.
Chris Hannant, director general of the Association of Professional Financial Advisers, said: “This is significant progress. When the initial proposals were published, Apfa voiced its concerns and with our members we’ve been lobbying the FCA since then for a revision.
“We’re pleased that the FCA has listened to the profession and come back with new proposals that represent a fairer deal for advisers.
“We’ll continue to work hard for advisers, reducing the regulatory burden and holding the FCA to account.”
The deadline for responses to the proposals is the 2 February 2015.
donia.o’loughlin@ft.com
