I make no apologies whatsoever for returning to the subject of FCA fees and, in particular, the gross unfairness of the FSCS levy, as I believe it is the most unnecessary, yet largest threat to the IFA sector and one that the government and the FCA can, and should, do something about.
The FCA bills currently dropping through IFAs’ letter-boxes are showing alarming and wholly unjustified increases. Many have more than doubled in comparison to last year and some elements have increased by an astonishing 3,000 per cent. This cannot continue; quite simply, I believe it is time for the FCA to start treating IFAs fairly.
Let me take just one specific example, which I have seen in the past few days, of an IFA firm whose overall turnover has hardly changed, yet its FCA fees have jumped from £22,500 last year, to £52,000 for the current year. This is an increase of £29,500 – an astonishing 130 per cent.
Within the detail of the invoice are lines which have increased by anything from 8 per cent to an outrageous 3,300 per cent.
Indeed, if we analyse the FSCS portion of the bill, though the life and pension turnover of the firm has fallen by about 5 per cent, the FSCS levy has gone up from under £11,000 to an incredible £32,000, an increase of more than 200 per cent.
Not only are such increases unsustainable; they are being levied against advisers who are working hard to do a good job for their clientsNot only are such increases unsustainable; they are being levied against advisers who are working hard to do a good job for their clients, and who have neither control nor influence over the firms causing the losses. In a nutshell, we have a fundamentally flawed system where the good pay for the bad, and, which I have long argued, is not fit for purpose.
I believe the answer is to place the liabilities on those who have both the market intelligence and the ability to directly reduce the future liabilities of the FSCS by spotting bad practices and dodgy products before they spread. In addition, these are the companies which benefit the most from the IFA sector, and they have the financial capacity to cover what, on a collective basis, will be a modest cost.
Finally, the administrative costs of collecting monies from a few hundred manufacturers would be a fraction of the cost for invoicing 10,000 IFA firms. I agree that even this solution would carry a degree of integrity, indeed, compared to the unfairness of the current system, it would look like perfection. So, please Mr Wheatley, is it not time for your organisation to start treating your customers fairly?
Ken Davy is chairman of SimplyBiz
