Just as the ink was drying on this month’s article I received details of my firm’s annual fees due to the Financial Conduct Authority. I was incensed by the amount they were asking for (which is putting it mildly). So I scrapped the original article and started writing about the shafting that I and most other advisers are getting.
The regulator’s fees are spiralling out of control, there’s no other way to account for a year-on-year increase of more than 80 per cent. Other firms I’ve spoken to have had similar increases, with some more than doubling over the year. Everyone I’ve talked to is furious, but their clients should be furious too.
I now pay around 5 per cent of turnover on regulatory fees, ignoring the time and additional cost of compliance. Like many firms, we’ve been absorbing some of the increasing regulatory costs but it can’t carry on, and ultimately clients will pay more, and for what?
Not all this money will find its way into front line ‘regulation’. Some will fund the very generous non-contributory pension scheme – at levels probably exceeding what many advisers and investors can afford to put into a pension.
The FSA (staffed by many of the same people) had light touch regulation that presided over a succession of failures. Keydata alone created a compensation bill of £330m – much of it paid for by firms that never touched those products with a barge pole. And so the kicking continues. The current funding arrangements suit the FCA well, and although they say they are open to alternative suggestions, they’re dragging their heels.
Why should firms with no complaints, no history of selling toxic investments, and especially those established post-KeyData, be expected to cope with fee increases of this magnitude? Where is the regulatory dividend, and more importantly, where is the accountability?
We’ve had more than 25 years’ of regulation and in that time all we’ve experienced is more regulation, higher fees, and a compensation bill that continues to climb. On that basis we could conclude that regulation has failed, and no amount of name changing can alter that. The regulator and all who sail on her should be ashamed. They are in part responsible for a large swathe of people now denied access to advice, and yet they still keep putting the fees up.
It’s time to apply some heat. I’ll be writing to my member of parliament, and I urge you to do the same, with the objective of making the regulator accountable.