The regulator has calculated how much the government’s Pension Wise service costs investment advisers as a proportion of revenue.
Online and telephone guidance service Pension Wise was set up by the government to help those approaching retirement decide what to do with their pensions, following rules introduced in April 2015 which gave over-55s more freedom to spend it how they wished.
Advisers contribute to the cost of running the service via FCA levies.
But they have long bemoaned paying for something they say offers them no business benefit.
Today (3 July) the FCA has published its fees and levies for 2017 to 2018.
In it – and in response to criticism from advisers - it reveals the scale of the cost to advisers of having to pay for the guidance service.
For the running of Pension Wise, advisers will pay £2.1m a year.
However the FCA estimates around 3,311 financial advisers, whose main business is to provide advice on retail investment products, will contribute £208,000 – or 10.1 per cent of this amount.
This means that these firms contribute 1.2 per cent of the total £17.2m Pension Wise funding requirement.
The £208,000 represents 0.01 per cent of the £3.2bn income these firms report for fees calculation purposes, the FCA stated.
Statistics published by the Financial Conduct Authority on Friday (30 June) revealed the shockingly low take-up of government guidance services.
In the regulator’s 48-page Financial Advice Market Review Baseline report, the FCA stated of those aged over 55 plus and planning to retire in the next two years, less than half (44 per cent) had used at least one form of guidance or information.
However the FCA revealed only 10 per cent had used The Pension Advisory Service (TPAS) and only 7 per cent used Pension Wise.
Elsewhere the FCA stated its annual funding requirement for for 2017 to 2018 is £526.9m.
Financial advisers – the majority part of the A.13 fee block – will contribute £77.1m to this.
This compares to £73.7m last financial year, an increase of 4.7 per cent.
Each year the financial penalties the FCA imposes on regulated persons, as a result of taking enforcement action, must be paid to HM Treasury after certain enforcement costs have been deducted (retained penalties).
These retained penalties are applied to the benefit of regulated persons through rebates to periodic fees in the following year.
For 2017 to 2018, financial advisers will benefit from a 5.1 per cent rebate applied to their fees, equating to £3.9m, less than the £4.4m previously estimated.
Advisers will contribute £1.9m towards the running of consumer guidance service the Money Advice Service, a drop of 31.3 per cent compared to projections.
In March 2017 the government announced that TPAS and Pension Wise would be merged to create a single pensions guidance body, so going forward the FCA stated it will track the use of the new government sponsored guidance.
laura.miller@ft.com
