The Association of IFAs announced today that it has made an operating loss of almost £154,000, in the 12 months to 30 June, as “administration costs” of more than £1.4m eclipsed declining underlying profit over the past year.
In the annual results, the group said it made gross profit of £1.25m in the 12-month period, down from £1.35m in the previous year, however administrative costs of £1.4m left it with a £153,899 loss. Last year, the group made an operating loss of £194,856 following administrative costs of £1.5m.
The annual report also said that Aifa will be seeking to reverse the proposed increase in the Financial Services Compensation Scheme threshold.
In July, the Financial Services Authority published its consultation paper on the funding of the FSCS, which included proposals to increase the annual levy limit for investment intermediaries from £100m to £150m and the removal of cross subsidy between Prudential Regulation Authority and the Financial Conduct Authority firms.
The report said: “More radical options were rejected, including a product levy and prefunding. Aifa will be seeking to reverse the proposed increase in the threshold, reinstatement of the cross subsidy from product providers and will be calling on the FSA to reconsider its decision on product levies.”
Aifa also warned in its report that the regulator’s proposed £110m Arch Cru redress scheme set a “worrying precedent” for the use of such schemes and place a “disproportionate burden on the advice sector compared to deals done with the banks providing support for the funds”.
The report said: “Aifa pressed hard for an alternative and less costly approach to providing compensation for consumers and expect the FSA to make a final decision shortly.”
Chris Hannant, policy director at Aifa, highlighted that the trade body has continued to restructure the organisation and reduce its costs over the past year.
Although a further loss has been made, Mr Hannant said the body is “in a strong position” going forward and will return to a surplus this financial year, he said.
He said: “It has been a challenging period for the advice profession. But thousands of advisers have benefitted from our FFWD Academy as part of a review of their business model. The new case study based diploma we launched with CIOBS has also helped experienced advisers to meet the new qualification levels.
“We have also continued to campaign on key regulatory issues, including fair liability for advisers, a fairer way to fund the compensation scheme and the overall rising cost of regulation and regulators.”
