The “unprecedented” increase in the FSCS levy has hit another financial advice firm as Intrinsic has written to its members to tell them to cover the cost of its bill.
The letter, sent to about 1,000 members last week, said the company expected the cost of the FSCS levy to be £2.2m in 2015 – but it received a bill for £5.5m.
The message from Steve Fryett, Intrinsic’s group sales director, said fees would increase by £12 a week for each financial planner and by £9.80 a week for each mortgage or protection adviser.
He said: “We have been fortunate to be able to hold them for the past two years, but we always anticipated that they would need to increase in 2016.
“Such is the size of the FSCS levy we can now confirm that this is the case.”
As the FCA begins its triennial review into the FSCS, the news adds another large financial advice company to the list of those who have seen their financials affected by the skyrocketing levy.
Both Hargreaves Lansdown and St James’s Place have seen their profits hit by the increased FSCS levy, the former seeing an increase of £3.6m and the latter £13.1m.
Meanwhile, last week, Intrinsic announced the purchase of the Financial Adviser School from Sesame and the launch of a national advice business called Old Mutual Private Client Advisers.
Background
In April, Intrinsic was selected by Sesame Bankhall Group to become its preferred adviser network partner after the latter pulled the plug on its network for investment and pension ARs.
The company said it expected this to lead to about 220 new wealth advisers joining the network, which has more than 900.
By the year-end, Old Mutual expects to have more than 1,200 restricted advisers within Intrinsic.
Right to reply
A spokesman for the FSCS said: “The FSCS protects consumers when financial firms fail. We’re there for people who have nowhere else to turn. The annual levy allows us to compensate consumers, and as a result, make a valuable contribution to consumer confidence.”
A spokesman for Intrinsic said: “This year’s unprecedented rise in the amount Intrinsic has been charged for the FSCS levy means we will have to increase fees from 1 January 2016.
“We appreciate that increases in fees are never welcome, but we have consulted widely with our appointed representatives since June on this subject.
“We believe that our approach, which will see Intrinsic share the burden of this cost increase, reinforces the degree of protection that our advisers receive by being part of a strong network.”
