In reference to the rise in Financial Conduct Authority (FCA) fees over the past few years, (FTAdviser, 2 September), the situation is rather farcical, but I think the article is a product of today.
Go back a dozen years and you will find professional indemnity insurance (PII) more expensive, and regulatory costs about the same in percentage of turnover as now. I wish we would balance the headlines somewhat and focus on the real killer – the Financial Services Compensation (FSCS) levy. Not PII. Not FCA fees.
The concept of the FSCS is an absurd approach which is unsustainable and is paid by the good (and the bad) to pay for (in the main) crooks. The method of calculation for the FSCS levy is very frustrating, not just because it is not in any way risk-based, but because the reporting figures on which the levy is calculated is open to abuse.
Inconsistently returned across firms and open to, shall we say, misrepresentation, some firms pay far more than others doing the same business and based on similar turnover. As an example, how much of your IFA turnover is unregulated? Well, planning is unregulated. As to how much a fee is – in terms of life and pensions, investments, pure protection – unregulated, advisers are wearing several hats at one time.
An adviser spends four hours doing a fact-find and gathering information. Is that regulated or not? What happens thereafter is certainly regulated, I guess, but in cost terms, about a third of the fee the client pays is for unregulated activity.
Sam Caunt
Director,
Moerae Life Financial Planning,
Northampton
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