The Association of Professional Financial Advisers will not support a call from Panacea Adviser for intermediaries to refuse to pay their regulatory fees if they can prove overpayment.
Chris Hannant, director general of the Apfa, said although advisers were unhappy they had been asked to pay too much in regulatory fees last year, contemplating a response of refusing to pay their fees this year, if they can prove they paid too much, would be tantamount to starting a “fight they could not win”.
Derek Bradley, chief executive of Reading-based intermediary forum Panacea Adviser, recently posted a blog in which he questioned whether “drastic action” was needed over the FCA overcharging financial advisers.
He pointed to the FCA’s own figures, which found that last year A12-category firms paid £45m in fees, while A13 firms (the category under which most advisers fall) paid less, at £39.2m. The average fee for an A13 firm is £6,000, for an A12 firm it is £24,000.
But fees for each £1,000 of income workout higher for A13 firms - which are authorised to hold client money - at £6.89 for each £1,000, compared to £2.39 for each £1,000 for A12 firms.
Mr Bradley said: “I am deeply disturbed that such a large amount can be dismissed as an anomaly. I think Apfa may have to consider some drastic actions to counter this if these assumptions are correct.
“If this were a bank or insurance company overcharging its customers and they tried the anomaly defence I am sure the fines would be raining down thick and fast. Should advisers withhold fees if they can demonstrate an overcharge? Should Apfa support such action?”
However, Mr Hannant added: “Those advisers who refuse to pay their fees are going down a route that will get them into disciplinary action and potentially see them being de-authorised.
“I am not saying that being de-authorised is right or fair, but that is how it works.”
Lara Joseph, press spokesman for the FCA, said: “The FCA has proposed changes to better align fees for larger firms in the A12 and A13 fee blocks.
“Many advisers pay the minimum fee of £1,000 and won’t be affected by these proposals - we expect those advisers who are affected to benefit from lower fees, if the new rules are introduced. The FCA is working closely with industry before finalising these changes and will listen carefully to all the feedback provided.”
Apfa had previously called for the FCA to offer advisers compensation for an estimated £118m in overpayments in the form of a reduced fee for the coming financial year.
However, at a roundtable in London earlier this month FCA chief executive Martin Wheatley roundly dismissed the possibility, saying “the fact... there may have been a mistake in one of the fees is quite different from saying there is an overpayment that needs an adjustment”.
He said: “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.”