Financial Adviser's Keep Fees Fair campaign letters have been finding their way to MPs across the country this August.
As parliament returned from recess this week, MPs found in their inboxes and on their doormats letters from advisers up and down Great Britain, raising the issue of unsustainably high Financial Services Compensation Scheme levy increases, and the rising Financial Conduct Authority fees.
The letters – based on two templates kindly donated by the Personal Finance Society and by Leeds-based financial adviser Phil Dibb – urge MPs to lobby the Treasury to look into the way the FCA and the FSCS are funded, and to consider the different funding options that have been proposed.
The letters also raise the issue of punishingly high premiums on professional indemnity insurance, which together with unfeasible yearly increases in regulatory costs means advisers are now shelling out double-digit figures just to operate in a regulated environment.
As Robert Sinclair, chief executive of the Association of Mortgages Intermediaries has put it, PII and the fact companies must retain a significant capital buffer (even in times such as Covid-19 when it would be reasonable to draw on this to continue operating), means advisers are "doubly indemnified" while facing "a tripling of costs" over recent years.
Options put forward to MPs include polluter pays – where there are higher financial penalties imposed on perpetrators of bad advice and behaviour; a product levy – where the providers build a small percentage of regulatory costs into the charging structure of a product (thereby also reducing the number of dangerous and unregulated products in the market); a levy on the market and on the total retail assets managed by the investment industry; and introducing a regulatory dividend on advisers who have never had a complaint upheld.
Regardless of which option is considered, the important thing, as Mr Sinclair said, is that the industry unites to put pressure on the Treasury and the FCA to act now on restructuring the way in which they impose costs on financial advisers.
Mr Dibb told his MP: "Please can I urge you to encourage the Treasury to think seriously about the increasing financial strain this is putting on good-quality, reliable firms like ours? The increasing FCA levies and the ever-increasing cost of PII is very likely to put well-run firms out of business and/or significantly increase costs to clients."
Financial Adviser has itself written to Elliot Colburn, MP for Carshalton and Wallington, as well as to Stephen Timms MP in his role as head of the Work and Pensions Committee, and to chancellor Rishi Sunak.
Readers have informed us that letters have also been sent to the following MPs: Stuart Andrew, MP for Pudsey; Mel Stride MP, chairman of the Treasury Committee; Jeremy Quin, MP for Horsham; Damian Hinds, MP for East Hampshire; Alex Chalk, MP for Cheltenham; Chris Elmore, MP for Ogmore; Bill Esterson, MP for Sefton Central; and Liam Fox, MP for North Somerset.
However, some advisers said they did not expect much hope from their MPs. Darren Cooke, chartered financial planner for Red Circle Financial Planning, commented: "I wrote back in February when we have the interim levy and he did what any [lackey] would do – forwarded my letter to the Treasury then sent me back the stock response from John Glenn. In other words, nowt, as we say up north."
Another adviser said: "I was most disappointed how Damian Hinds, my local MP came back, just saying: 'Thank you for your note regarding the FSCS Levy. I have in the first instance forwarded your query to the FCA for a response, and will be interested to see their reply, although the government does not have any active role in setting or reviewing the levy'."
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Let us know which MP you have written to and what his or her response has been as part of our ongoing Keep Fees Fair campaign
