Gov’t exemption for FCA on fees shows contempt for advice

Ashley Wassall

Some things never change.

Having spent a wonderfully relaxing two weeks travelling Northern Italy, I returned this week to find that the most popular story on FTAdviser in my absence was one reflecting sector anger at rising regulatory fees.

The Financial Conduct Authority confirmed that its fees would be hiked 13 per cent for advisers in the current financial year, following the bifurcation of its predecessor the Financial Services Authority.

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I’ve spoken out against the truculent attitude that prevails in much of the sector in the past, but on this issue your outrage is both understandable and righteous.

This is not an isolated instance of fees rising due to the administrative cost increase of running two regulators where once there was one; fees have been hiked by a similar level consistently in recent years.

That is not to mention the seemingly exponential increase in levies to fund failures compensated through the Financial Services Compensation Scheme, which are set to increase even further after the regulator upped by 50 per cent the amount that can be charged to the investment intermediary sub-class.

Advisers, of which there are fewer due to a spate of expected exits in the lead up to the Retail Distribution Review, are also bearing the cost of a government information service that pitches itself as a rival purveyor of independent (and free) advice.

I, like most of you, find this repugnant. But I am beginning to believe perhaps we’re wrong directing our collective opprobrium at the FCA.

In the Budget in March, the government said it would seek to reduce the regulatory fee burden for business in the 2015/2016 spending round, the package of cuts that will take effect in the year following the next election the detail of which was also delivered during the past couple of weeks.

In the final document, the government announced it had agreed a £78m drop in fees across a number of regulators, equating to “at least a 5 per cent real terms reduction” in most cases.

This is great news for UK business, which has seen an 8.5 per cent increase in regulatory costs across the board in the past two years, according to a study I was sent this week by the Forum of Private Business.

Unfortunately - and detestably - this will not benefit you, dear reader. In its infinite wisdom, the government exempted the financial services regulators from this cost-cutting imperative, the Treasury confirmed to FTAdviser.

In short: while they seek to make the UK a less prohibitively costly place to operate generally, the government is apparently happy to allow costs in financial services, and particularly for advisers, to spiral upwards at an alarming and untenable rate.