“People with COB permissions who don’t advise on specialist higher risk investments like EIS or VCTs pay for those that do,” he said. “People at the riskier end of mortgage lending have their fees subsidised by those who do not operate in that part of the market.
“I suspect a carve-out would be impossible, even if it could be applied universally across all areas of business.”
Meanwhile, Derek Bradley, chief executive officer and founder at Panacea Adviser, described regulation as a “parasitic operation”.
“It needs to feed on something to sustain its growth,” he said. “In this case, that growth has seen a whole food opportunity in crypto to gorge on and that is why it is moving into this space.
“Who pays is a question that needs to be looked at in the same way as who is protected and from what.”
He added: “Unregulated products should not be advised upon by regulated firms in an ideal world. It is always the advice that causes the problem. On a personal front I have never understood why a regulated firm would want to swim in such dangerous water.”
Although Bradley raised concerns about the product itself, he too argued that if this is to be regulated, the cost should be shared.
“In fact if all regulatory costs were shared based on a percentage of turnover and nothing else that would be very fair,” he added.
“Today's innovation is tomorrow's FSCS call. By regulating the product and ideally determining how it should be used and with who, for what would make a lot of sense.”
An FCA spokesperson said: “We consulted fully on the changes to our fee structure. We are spreading the costs proportionately across all the relevant fee-blocks.”
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