A straw poll conducted by an FTAdviser investigation has revealed that the Financial Services Compensation Scheme interim levy is costing some advisers up to a third of the total fees and levies they paid last year.
This week, advisers started to receive their FSCS interim levy bill. The £20m interim levy for life and pensions intermediaries relates to “bad advice” given on self-invested personal pensions and comes despite a three-year funding plan designed to prevent top-up bills.
FTAdviser conducted a straw poll of advisers, which revealed wide disparities in their latest bills when compared to their total regulatory bill received in July/August last year.
The first adviser spoken to received an interim levy of £791, which equates to 33 per cent of his total £2,400 regulatory bill last year.
A second told FTAdviser their interim levy was £926.71, equating to 17.7 per cent of last year’s total regulatory fee bill of £5,221.92.
“I think it’s a relative cost but why are we paying for people who were greedy?” they stated. “We put our clients into investments that have an average return of 4-6 per cent and are recognised regulated companies. Arch Cru, Keydata, we didn’t put clients into them.
“Products should be regulated where if you sell an unregulated product, there is no pay out regardless if the adviser is regulated. Criminal consequences should also be increased for those who commit fraud and mis-advise.”
A third financial adviser recently received an interim FSCS levy bill of £312.87, 14 per cent of last year’s total regulatory bill of £2,244.62.
“As a percentage of total fees it is actually very large,” the adviser stated. “I am concerned that when we inform the FCA of firms marketing unregulated collectives to hold in Sipps/Ssas to other advisers, they seem to not look at these firms as much as regulated firms.
“There are serious concerns about their perimeter monitoring, which is where the costs seem to keep falling on the FSCS levy payers.”
A fourth adviser paid total fees last year of £9,290 plus £500 for a consumer credit licence. He has just been billed £1,151 for the FSCS interim levy which equates to 12.4 per cent of total fees.
If payment is not made by the due date, advisers incur a further £250 charge plus interest, which incensed a couple of advisers who could not download the invoice.
One adviser commented: “What gets me is the sheer arrogance of the footnote to the email telling me to go and download the undownloadable invoice.
“I can live with this if they can conduct themselves professionally, but it really sticks in the throat to be warned in such terms for non-payment of an invoice they cannot actually deliver and will not respond to email enquiries about.”
Neil Liversidge, managing director of West Riding Personal Finance Solutions, told FTAdviser that he has just been billed £473.07 for the interim levy, which equates to 7.5 per cent of his total £6,289 levy last year.
He says: “£400 is a small amount of money, but what annoys me is that this arises from incompetent regulation in the first place.
“We keep getting these levies but it’s stuff I have nothing to do with. We have not sold a single Keydata, Arch Cru, Catalyst...we are not into scandals. Crap is being sold by people who think they are cleverer than me and then they go into liquidation and we pick up the bill.”
Another adviser’s whole regulatory levy was £7,000 for last year and today he was billed £368 for his interim levy, equating to 5 per cent of last year’s bill.
He stated: “I am under no illusion there is another wave, but I am pleasantly surprised. We all hate paying it, but if the industry sold boring products we wouldn’t have to.
“It’s irritating that we have to pay for failed providers like Keydata. It’s all so random. We have no idea and no control over what the levy will be. There is a total lack of predictability and that makes it hard for advisers.
“A number of us have been quoted in the press as saying do not sell these rubbish products. Advisers sell them, they’ve gone wrong and we have to write cheques for it.”
He added: “If people want to stop paying interim levies, ‘clever’ advisers have to stop doing ‘clever’ stuff.”
Another adviser group received an interim levy of £3,409.88, equating to 2.3 per cent of their total £149,143.35 bill last year, noting: “Given the headlines we anticipated that our share of the levy would be far more than it is.”
donia.o’loughlin@ft.com
