Adviser tells FCA chief to ‘back the good guys’

Adviser tells FCA chief to ‘back the good guys’

The Financial Conduct Authority must take responsibility for the Financial Services Compensation Scheme levy that is widening the advice gap, according to an adviser’s open letter to acting chief executive Tracey McDermott.

Paul Beasley, managing director of Richmond House Group has used the fact that his petition - calling for an independent review of the regulation of advisory firms and the compensation scheme - has passed the 1,000 signatory mark, to direct his message to the top of the regulator.

The campaign began in July and earlier this month had hit 800 supporters, prompting Mr Beasley to back the Association of Professional Financial Advisers’ efforts in this area.

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Now, he has called for Ms McDermott to act, following the debate around FSCS funding turning recently to its impact on financial advisers.

Earlier this week, the Treasury Select Committee heard from members of the FCA’s consumer and practitioner panels about the growing problem.

Practitioner panel chair and HSBC UK and Europe chief executive Antonio Simoes told MPs that the FSCS levy “disproportionately impacts smaller firms” and more predictability “would be desirable”.

Consumer panel chair and Citywide Financial Partners director Clinton Askew added that while small firms were not yet being put out of business by the FSCS levy, many were struggling and therefore the issue needed looking at.

Mr Beasley wrote that it is encouraging that FSCS funding will be assessed as part of the Financial Advice Market Review and noted the fact that FCA chairman John Griffith-Jones told the Treasury committee that regulatory fees for advisers “can’t keep going up every year” and it is time to focus on ways to prevent further unexpected fee hikes.

“It is indeed time to back the ‘good guys’ and put an end to the unfair way in which rightdoing advisers are forced to pay the price for the bad advice given by others,” stated Mr Beasley.

“Chancellor Osborne argues that it’s not appropriate for the government to intervene on FSCS funding and yet he does so already by distributing the big bank fines he takes to good causes, rather than keeping the FSCS levy down.

Mr Beasley argued that huge increases in the FSCS levy further diminish advisers’ ability to deliver an improved client experience, stating that maintaining the status quo is not an option, as smaller firms will continue to struggle and IFAs will exit the profession, “making it even harder for ordinary people to source financial advice”.

The same goes for even the largest firms, with both Hargreaves Lansdown and the Lighthouse Group reporting recently that profits had been hit by increased levy bills.

“Ultimately, the FCA must take responsibility,” Mr Beasley concluded. “Higher FSCS levies and the advice gap that results are a reflection of the failure of the regulatory regime itself.”