Regulation  

FSA proposes massive cut in adviser funding for Mas

A 15-page FSA consultation, the Mas cost allocation method for 2013/2014, proposed reforms in the way the organisation was funded to reflect the demand from customers.

The FSA said Mas had proposed to use the data it gathers on how people used its website, telephone advice line and face-to-face advice service as a basis for allocating its advice costs.

According to the document, between August and November 2012, 14 per cent of users looked for information on homes and mortgages while 11.5 per cent used the mortgage calculator.

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Only 2.6 per cent wanted financial help or advice and just 0.8 per cent viewed comparison tables on investments.

According to the consultation, based on this usage home finance providers and administrators would see their fees soar by 1309.1 per cent, while home finance arrangers and advisers would see them drop by 81.3 per cent.

The closing date for consultation is 22 February 2013, with the expectation that changes would apply from the 2013/2014 year.

Karen Broughton, marketing and service delivery director for Mas, said: “The current system was initially set up for a year so we are slightly late in revisiting it.

“This set of proposals complements our proposed business plan

“At the moment the way fees are collected for Mas are part calculated in FSA costs. It does not reflect demand for our service

“We are proposing a revision to the formula so that each area pays in line with customer demands.”

She denied that criticism of the service was a trigger, adding: “The FSA has previously indicated it would look at our fee structure. We want to find a more logical evidence based approach to funding.”

Statistics

1309.1 per cent – rise in fees for home finance providers

93.5 per cent – drop in fees for advisory arrangers, dealers or brokers

Industry view

Chris Hannant, policy director for the Association of Professional Financial Advisers, said: “This represents a step in the right direction. However we should not ignore the fact that the overall cost of regulation for advisers has increased. The FSA needs to keep a handle on the cumulative effects of significant fee rises on the advice profession and guarantee that fees are proportionate, fair, and do not reduce vital access to financial advice.”

Adviser view

Peter Davies, founder of Cardiff-based Create Wealth, said: “Mas should be funded by central government rather than the IFAs on the basis it is open to everybody.”