Advisers are to pay an extra £6.9m in fees towards the Financial Conduct Authority, an increase of more than 10 per cent, making the fee block the hardest hit in terms of regulatory levies rise this year.
A £74.9m levy has been proposed by the regulator for advisers as part of its consultation paper on funding requirements for 2015/2016, up from £68m last year.
Most ‘A’ fee-paying blocks will have to pay between 8.2 and 8.5 per cent more in the coming financial year, which the FCA said was due to, in part, a new £27m allocation towards ongoing regulatory activity.
Exceptions to this include the A7 block covering portfolio managers, who will pay 3.5 per cent more, the A9 block covering managers and depositories of investment funds, whose contribution will actually fall 2.6 per cent, and the adviser A13 block, which will pay 10.2 per cent more.
Last year adviser fees across the board fell by close to 19 per cent after it corrected an ‘anomaly’ that affected advisers that did not hold client money, resulting in the A12 fee block being deleted.
Many will still decry a steep rise in fees for regulated advisers at a time when the regulator itself is acknowledging cost as a key barrier, especially ahead of new pension freedoms in which the sector is expected to play a key role.
The new allocation consists of £16m in staff costs, which the regulator said was focused on “increasing our headcount to deliver our enhanced objectives” and £11m on non-staff costs, which include upgrading its IT and technology platform and developing an academy.
In total the FCA has asked for £481.6m from the industry, 8 per cent up on 2014, of which £479m will fund its ongoing activities as set out in a business plan earlier this week. The minimum FCA fee was increased for the first time since 2010 by 8.4 per cent to £1,084.
The consultation paper also revealed that almost £5m more has been allocated to the guidance service Pension Wise by the Treasury.
On 12 January 2015 the Treasury published an indicative amount of £35m. However, the FCA said today in its paper that its costs for providing Pension Wise in 2015/2016 will be £39.1m. This remains an estimate and may be revised later in the year.
Advisers are still to pay 12 per cent of the levy, half that of most other fee blocks due to it being deemed likely to benefit least from the service, meaning the sector will now pay £4.7m, up from the previously forecast £4.2m.
Those advisers who have incomes below £100,000 will not pay towards the Pension Wise levy.
Chris Hannant, director general at the Association of Professional Financial Advisers, said that it was imperative that the FCA “get a grip on regulatory fees” and that it cannot just present the industry with an ever rising, inflation-busting bill.
“Apfa’s 2014 report on regulatory costs indicates that direct and indirect regulatory costs represent around 15 per cent of the cost of financial advice. This is a significant cost to the consumer and reduces access to advice at a time that government reforms to pensions make affordable financial advice ever more important.”
Today’s consultation paper revealed that the Money Advice Service has had its levy slashed by 2.5 per cent from £81.1m to £79.1m. Two separate levies are being proposed to raise £34.1m for delivering money advice and £45m for the coordination and provision of debt advice.
The energy and water industries are voluntarily contributing £2m towards the cost of debt advice bringing the debt advice budget to £47m.
The FCA said in its paper that to fund an increase in debt work, the annual money advice element of the budget has gone down by £8.9m to £34.1m, a decrease of 21 per cent on 2014/15.
The paper stated: “This has been enabled by efficiencies, cuts to some budget lines such as printing, and reductions in above-the-line marketing (eg TV, radio).”
Advisers will be levied £4.2m instead of the £3.6m they were levied last year.
ruth.gillbe@ft.com
