Milton introduces client fee to offset rising FSCS costs
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Philip J Milton & Company is introducing a 2 per cent client fee to cover regulatory costs following the huge hike in Financial Services Compensation Scheme costs.
The IFA firm saw its interim FSCS levy rise from £6,009 in 2010 to £51,459 this year.
As a result, it is introducing a 2 per cent initial charge from April 5, which will apply to new business and signifi- cant investments such as setting up a discretionary portfolio.
The charge will contribute to regulatory costs, including the FSCS and the Financial Ombudsman Service, regulatory fees and professional indemnity insurance.
Managing director Philip Milton says: “In the end, these things provide protection for the customer but the customer has not necessarily caught up with the fact that he or she has to pay for it.
“We have not been taking commission for a long time and we have got to introduce this payment to protect ourselves. With the retail distribution review on the horizon, there will be more and more firms that have to do this.”
Thameside already operates a tiered pricing structure that factors in regulatory costs.
Associate director Jason Ogelman says: “Many firms have been hit by unexpected increases to FSCS levies and we are all in the same boat. We hope the increased costs are a one-off but if the costs cont-inue to spiral we would have to price that in accordingly.”
Taxbriefs editorial director Danby Bloch says: “I would question whether 2 per cent is enough. There are direct compliance costs to meet but there are also indirect costs associated with compliance such as running a compliance department and file-checking.”
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Readers' comments (2)
Dominic Thomas | 18 Mar 2011 9:21 am
The FSCS fee is obviously a fairly nasty cost for all of us to carry, but I am still a little perplexed about the jump for this company - which has grabbed headlines. I may be very wrong, but isnt the FSCS fee broadly 2.5% of turnover? and in line with data supplied for RMAR/Gabriel? If this is the case then this suggests turnover of over £2m...which isn't exactly out of orbit for a firm that takes fees and commissions, is 25 years old and has a reasonable number of staff. Am I missing something here?
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Norm d'Plume | 18 Mar 2011 11:11 am
It's time customers realised that they get nothing for nothing.
Example, last night I had a note from a client telling me her buildings sum insured was 2/3rd what it should be, but she didn't want to increase it yet if it costs her more! I wonder if she would put more in the supermarket trolley and not expect to pay more?
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