One adviser has seen his total regulatory fees and levies bill jump by an astounding 400 per cent, excluding March’s interim levy, while all other advisers FTAdviser spoke to said bills had increased by at least 50 per cent.
This week advisers received their regulatory fees and levies for 2015 to 2016, which includes a periodic fee to the Financial Conduct Authority, a Money Advice Service fee, a Financial Services Compensation Scheme levy, a Financial Ombudsman Service levy and the pension guidance service levy.
An adviser, who declined to be named, said that his fees have increased by almost 400 per cent, while his turnover went up by around 25 per cent.
“This doesn’t even take into account the interim levy from a few months ago.
“My big beef with this invoice in particular is that there is no transparency in the calculation. How can my fees go up so much in relation to my turnover, when compared to other firms? It must be something to do with my business mix, but I can’t easily tell.
“The bill is big, but at least if I understood it, perhaps it would be easier to bear.
“Something has to be done about this. The bad is driving out the good. I accept that the FSCS has to be paid for, but there’s got to be a better way.”
He added that he would be in favour of a product levy spread across all products.
“There would need to some way of extending that to unregulated products, because so often it is they which cause the problems. Maybe firms advising on Ucis or similar should have to pay a special levy.
“The way it currently works (or doesn’t work), is that good advisers end up paying after the fact for bad advisers.
“Why can’t there be some sort of pre-funding? If a firm is engaged in advising on more risky areas, this could be picked up in the RMAR return - it would be easy to add a question about unregulated products, for example - and a firm’s FSCS levy increased accordingly.”
Another adviser, who declined to be named, has seen a 135 per cent increase on last year’s bill, which was around £6,300.
His bill, seen by FTAdviser, is now £14,846, of which £12,403 is for the FSCS.
The main driver of advisers’ bills is, unsurprisingly, the FSCS levy.
In April, the FSCS revealed that pension and life intermediaries would be stung with a maximum £100m levy, a 75 per cent increase than that which was expected when the FSCS gave its levy indication earlier this year and three times last year’s bill.
This is driven by unregulated investments wrapped into self-invested personal pensions.
The adviser described the bill increase as “shocking”.
He said: “This equates to around 2.5 per cent of our gross profits. When you include our PI costs which are around £12,000, this bumps this up to 5 per cent.
“This is just for regulatory fees and does not include phones, rents, back office systems, software providers, and we have to try to make a profit too. Plus, they can slap us with another bill, such as interim levies, later on in the financial year.”