Coronavirus  

Regulatory fees still a bigger threat than Covid

In a survey of 300 advisers by Quilter in July last year, advisers and clients who may have been hesitant in the past to adopt video technology are now embracing this technology. 

The study by Quilter’s national advice business found 88 per cent of advisers would continue to provide remote advice when the pandemic is over.

Article continues after advert

Meanwhile, video conferencing has not hindered advisers gaining new clients – with 77 per cent of advisers saying they have gained some during the period.

Gemma Harle, managing director of Quilter Financial Planning, says: “The retail investment sector likely faced more of a challenge given the dramatic dip in the markets and then continued rollercoaster over the last number of months. This makes people nervous to invest, particularly when they may be facing economic uncertainty with job cuts and furlough.

“However, we also know that some households are saving now more than ever as our lives have become so restricted.”

The FCA announced last week that it would send out a third mandatory survey to advisers – an activity many believe will become common practice.

Ms Aldridge says: “In a way they are more practical than the Gabriel returns, and more meaningful. It’s just good business practice to be checking this kind of data on a frequent basis anyway. Any good company will have the details about their financial situation and resilience at their fingertips.”

Tim Fassam, director of government relations and aid policy at trade body Pimfa, adds: “The FCA seems keen to be more data driven. So, I think we can and should expect more surveys of this type and on a wider range of issues. That should be a positive development as the more data the FCA has, the better it should be able to work with the firms it supervises.”

Advisers have clearly had to adapt their business models during the pandemic in order to survive. However, for many the biggest concern is not coronavirus, but the rising regulatory fees.

Mr Fassam says: “There are challenges with Covid, but of equal, if not greater, concern to most firms I speak to are ever-rising costs, whether that’s professional indemnity insurance premiums or the Financial Services Compensation Scheme levy, or both.” 

Keith Richards, chief executive of the Personal Finance Society, says: “The issue that remains is the high level of volatility in PII and FSCS levies, which has been felt more in the latter half of 2020, and so may not have fed fully into figures for 2020. 

“It is important to ensure that the costs of compensation are managed in a less volatile way than they currently are through PII and FSCS levies, or else the resilience of firms may be affected – either in their ability to function commercially, or in the scope of the services that they are able to offer to clients.”