The amount advisers are expected to contribute towards the City watchdog is to rise by 1.5 per cent to £82.3m next year, while overall, the FCA’s budget is going up by 4.5 per cent to £616.5m.
Advisers said the figures were a relief compared to the ever increasing costs of the Financial Services Compensation Scheme levy.
Tim Morris, independent financial adviser at Russell & Co, said it was “refreshing” that the fee wasn’t being hiked by a large amount and was “broadly in line with inflation”.
He also said it was positive that it appeared to take into account that financial advice firms have had a difficult time in the past 12 months.
“They even seem to have partially protected advisers from the ever increasing black hole that is the Fos”, he added.
Victor Sacks, director at VS Associates, agreed that fees “are only going to go one way”, so was pleased to see a small increase.
He added: “Sadly, it will be another year of collecting fees from those of us that keep their house in order and do right by our clients as opposed to those who do not and make headlines for the wrong reasons.”
Meanwhile, Simon Harrington, senior policy adviser – public policy at trade body Pimfa, said given the circumstances it was welcome that the FCA has “sought to take an proportionate approach to fees”.
Harrington said going forward, Pimfa hopes focus is placed on whether or not these firms are receiving value for money and are given a “supervisory system which is fit for purpose, and an agile regulator who can take advantage of many of the opportunities presented to this sector following our exit from the European Union.”
His concerns were echoed by Darren Cooke, chartered financial planner at Red Circle Financial Planning, who said it was hard to find the benefit behind the FCA fees "with the continued failure of the FCA to regulate various parts of the investment industry particularly mini-bonds, LCF being the most famous example but there are many others, and continually failing to act even when told of scams and illegal practices.
“Meanwhile issuing pointless surveys to advice firms, spending money on changing the FCA register, actually making it worse than it was before, and on changing our reporting systems, again with no discernible difference or improvement."
He added: “We have no choice but to pay up, we cannot refuse, there is no alternative provider we can use instead. We have to pay whatever bill they send us or close down our businesses.”
FSCS levy
But others said the FCA fees were incomparable to the FSCS levy which has continued to rocket over past years.
Martin Bamford, head of client education at Surrey-based advice firm Informed Choice, said: “As a regulated firm, our annual levy towards the running costs of the FCA pales into insignificance relative to FSCS funding costs, for which the FCA is indirectly responsible.
“I continue to dream of a day when effective regulation and supervision results in falling FSCS fees, as well as a smaller role for the FCA in protecting consumers. Any FCA boss that can cut FSCS and FCA fees in the future would be truly successful in their role.”
Within its fee proposals, published this afternoon (April 20), the FCA recognised the overall burden on the advice sector with the increases in the FSCS levy.
The total industry levy is expected to rocket to £1bn for 2021/21 – marking a 48 per cent rise on the previous year.
Advice firms are expected to contribute £240m, the same as last year, due to the fact the class is forecast to breach its funding limits for the second year in a row.
Alan Chan, director and chartered financial planner at IFS Wealth & Pensions, said the FSCS share was over 75 per cent of the firm’s 2020/21 levies and he expected this share to continue to grow each year “unless drastic action is taken”.
Chan said: “It’s unacceptable and unsustainable with it's year-on-year double digit increases so I would welcome proposals to tackle this as a matter of urgency.
"It’s good to see the FCA acknowledge this in the ‘what we want to change’ section, but it feels like it’s all at a glacial pace and I’m not convinced enough will be done or can be done by the FCA alone to address this.
“For example, redirecting the FCA fines to reduce the levies but this would involve the Treasury, or introducing a risk-based product levy, as put forward by the PFS, but this would probably require government intervention.”
amy.austin@ft.com
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