In April the financial regulator announced advisers would see the amount they contribute towards the FCA fall in 2019/20, proposing the sector collectively paid £79.4m towards its running costs at a drop of 1.1 per cent on last year's bill.
This was despite the regulator seeing its costs increase by 2 per cent to £537.7m, which the FCA said met its commitment to keeping its spending flat in real terms.
But as advisers began to receive their regulatory bills for the upcoming year, some were in for a shock.
FTAdviser heard of bills jumping by as much 30 per cent, largely due to increased Financial Services Compensation Scheme costs.
The bill advisers receive from the FCA includes the regulator's own fees, and also the FSCS levy, which the City-watchdog then passes onto the life-boat scheme, and the Financial Ombudsman Service levy.
FTAdviser understands the bill sent out by the FCA includes a drop in the regulator's own fees and those of the Money and Pensions Service, but an increase in rates for the Fos, pensions guidance and FSCS - with some firms potentially facing an increase of 113 per cent in FSCS costs.
George Goward, managing director at George Square Financial Management, said his regulatory bill for the upcoming year had risen to £43,000, a jump of more than 20 per cent from £35,000 the previous year.
Mr Goward said his "frustration" lay with the large proportion of the bill making up the FSCS levy, which in his opinion funds "claims coming from the mis selling of unauthorised investment products".
Another adviser wrote on Twitter of how his invoice had increased by 30 per cent to £14,500 this year, of which he said £11,500 was to pay the FSCS levy.
Nick Bamford, founder of Informed Choice said his company's regulatory bill had increased by more than 24 per cent this year, with 80 per cent of the total figure ringfenced for the FSCS levy.
Mr Bamford said: "It is within the budget we had set aside for this year, but the amount being paid to the FSCS is absolutely a sign of regulatory failure and not regulatory success."
Alan Chan, director at IFS Wealth & Pensions, said his firm had not yet received its bill but he expected a significant increase following an almost 30 per cent rise last year.
Mr Chan said: "I can’t ever see it coming down. The FSCS is without doubt the highest levy within the regulatory fees and has been for years, closely followed by the FCA’s own fees.
"To me, this is a clear sign of regulation failure if both these costs are equally high."
In April the FSCS confirmed it would levy £532m from the industry this year, £16m more than it had originally predicted and inclusive of £74.6m in management expenses.
The lifeboat scheme pointed to an "uplift" in the number of claims expected against self-invested personal pension operators as cause for the increase.
FSCS said the final levy to be shouldered by life distribution, pensions and investment intermediaries this year would be £153m.
Martin Bamford, managing director at Informed Choice, criticised the FSCS levy as being "symbolic of regulatory failure".
He said: "That the FCA has failed to address the consistently high cost of funding compensation for the clients of failed firms is a damning verdict of how ineffective this regulator has become.
"Of course, there is no real incentive for the regulator to take proactive steps to protect consumers, when they know that regulated firms are obliged by regulation to pick up the tab each time.
"There’s no other industry where this crazy compensation funding model applies, and MPs should be forcing the FCA to answer for their ineffective approach to consumer protection."
rachel.addison@ft.com
What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.
