Leaders of three industry trade bodies have called on politicians to lighten the regulatory burden on financial advisers in the light of huge legislative changes.
In an open letter to the leaders of the UK’s political parties, seen by Financial Adviser, Apfa chairman Lord Deben and Patrick Bunton, the chairman of the AMI, said the FCA’s decision to increase regulatory costs was “disproportionate”.
The Rt Honorable Lord Deben, said: “Our two bodies support the need for a regulatory framework which protects consumers and creates a transparent and healthy finance sector.
“However, this must be done in a cost-effective manner and we are concerned about the standards of cost restraint and efficiency at the FCA.
“It is not unreasonable to expect the FCA to abide by some basic standards of budgetary management and it brings into question the competence of an organisation that cannot live within a level budget as is necessary in business and across government.”
Liz Field, chief executive of the Wealth Management Association, also warned that ever-changing pensions legislation had created a heavy burden on wealth managers and the schemes they manage.
She said: “The pension changes have gone a little too far. Some 80 per cent of UK businesses are small and their capacity to deal with huge regulatory change is limited. There has been too much [change].”
To help wealth managers grasp the opportunity to advise clients on these changes, she said it was important to raise awareness and educate people.
In March the FCA started a consultation on the fee rates it intends to charge, with advisers being hit with the largest regulatory fee hike.
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, in part, to a new £27m allocation towards ongoing regulatory activity.
But Lord Deben, the former Cabinet minister, said this was unwise because it was becoming harder for all but the wealthy to access financial advice. He said: “Regulatory costs already account for around 15 per cent of advice to individuals.
“This together with the post-RDR fall in adviser numbers means that the ability of all bar the wealthy to obtain professional financial help is severely restricted, at a time where significant changes to the pensions and savings landscape mean access to affordable financial advice is increasingly vital.
“Against this background, the FCA’s decision to increase fees for advisers by 10 per cent appears particularly short-sighted and could be severely detrimental to good consumer outcomes.”
He added that any increase in regulatory charges would hit the consumer.
Right to reply
A spokesman for the FCA said: “We are always conscious of the cost of regulation, which is why we work to ensure our requirements are proportionate.”
Adviser view
Gary Dunn, Lancashire-based wealth partner for True Potential Wealth Management, said: “I do think there are an awful lot of regulatory requirements for advisers. Clients’ interests and their goals and aspirations should be the guidelines for advisers, and consumers should be protected. This would be better than having rule after rule after rule.”
