FCA rejects Apfa fee compensation bid

The Financial Conduct Authority has rejected calls from the Association of Professional Financial Advisers to reimburse advisers who may have paid too much in regulatory fees.

Last week Apfa publicly called on the FCA to partially pay back fees to firms which do not hold client money, which the regulator previously admitted were hit with a disproportionately high fee compared to their higher-risk money-holding peers over several years.

However, FCA chief executive Martin Wheatley roundly dismissed the possibility at a media round-table yesterday.

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He said: “I think the fact that we have said there may have been a mistake in one of the fees is quite different from saying there is an overpayment that needs an adjustment the following year.

“If there was, we would then end up in this ridiculous position because at the end of the day we’ve got to collect our fees. We end up with zero at the end of the year, it’s not like we have a lot of reserve. So were we to decide we had to go and reimburse in a sector we would have to go and charge that somewhere else and you can imagine that would get very messy.

“So no, there is no suggestion of any reimbursement. We look at fees every year and what the fee block should be.”

In October the FCA revealed that almost 7,000 firms could enjoy a drop in regulatory levies if a proposed restructuring of how fees are collected is approved by the regulator.

Under the current fee structure, firms which do not hold client money pay an average of £6.89 per £1,000 of income, while those that do hold client money pay an average of only £2.39 per thousand.

The restructured fee blocks would result in firms not holding client money to have their fees more than halved, paying an average of £2.84 per thousand.

Mr Wheatley added: “The truth is our fees do change. Each year we look at the resources being used and we change each year. For many of the IFAs they are on the minimum, something like three quarters pay the minimum amount in any case, which is probably below the cost of providing a regulatory service.

“So we have to recover our costs somehow and that cost gets dished out to the industry in what we think is the fairest way possible.”