The advisory industry has unsurprisingly reacted strongly to the Financial Conduct Authority sticking with its fees and levies demands for the coming year, which it argued were “fair and proportionate”.
The regulator’s policy statement issued earlier today confirmed its planned 10.2 per cent fee hike for advisers over 2015 to 2016, with firms in the A13 block paying £74.9m, up from £68m in 2014 to 2015.
Very little changed during the consultation period between now and the end of March, despite over 70 responses from eight trade bodies, two insurers, two consultancy firms and an adviser network, along with 52 responses related to individual financial adviser or mortgage adviser firms.
Garry Heath, the director general of recently-launched adviser body Libertatem, told FTAdviser that the only way to tackle this is to make the FCA more accountable.
“They decide how big the costs are and we have had enough of that. The Treasury Committee seems very keen to do something about this.”
He added that the financial advice sector represents two out of 1,000 complaints that go to the Financial Ombudsman Service yet “we pay 16 per cent of total costs”
“How much risk do we, as a sector, offer the public? Until we can get Parliament to do something about this, it will continue..all we can do is put pressure on them.
“In 1997, the regulator’s budget was £22m and now they are asking for £74m. Regulatory costs are three times more expensive than 15 years ago and that is without all the other bits and pieces.”
Alan Solomons, director at Alpha Investments and Financial Planning, told FTAdviser that the fees set out are “totally unacceptable” in a period of low or non-existent inflation and with IFAs being such low risk these days.
“They need to reclassify certain types of brokerages and DFM’s into another fee block as pure advisers have proved to be low risk and so need less supervision from the regulator.”
He also stated that the FCA need to learn to live within its budget, pointing out that an organisation like the Institute of Chartered Accountants in England and Wales moved their administration to Milton Keynes years ago to save costs.
“With technology as it is, do they really need all the floors in their building in Canary Wharf,” Mr Solomons asked.
“Something needs to be done that is different. It is a sign of madness to rename the regulator and in effect do the same and expect something different; it just will not happen!”
Carl Lamb, managing director at Almary Green, complained that advisers were just becoming a cash cow to be milked.
“I don’t know what the solution is, it’s just becoming unsustainable really and I’m not sure they understand what the impact is. It will drive further consolidation within the industry and ultimately add costs for clients, we’re just in the process of increasing fees for the third time in 15 years.”