Aifa warns of increased fees for firms with seven or more advisers
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The Association of Independent Financial Advisers says any directly authorised firm with seven or more advisers will see their FSA fees increase in the next financial year.
The FSA today published its regulatory fees and levies for 2010/11. The regulator says the smallest advice firms will see the minimum fee fall from £1,850 to £1,000.
An FSA spokeswoman says that of the medium to large firms that pay the minimum and straight-line fee, 90 per cent will pay lower fees in 2010/11, with 10 per cent facing an increase.
But Aifa policy director Andrew Strange says more than 10 per cent will see an increase.
He says: “Any directly authorised firm with six or less advisers will pay less, but any directly authorised firm with seven or more advisers will have to pay more in fees.
“An increase in FSA fees by an amount may not be difficult for IFAs to pay, but the accumulative impact of the £70m FSCS interim levy and the costs of the transition to an RDR-compliant business model will be significant.
“Aifa has already met with FSCS to discuss the true nature of those classed as providers, such as Keydata. We will continue to argue that these costs should be borne by the provider sub class.”
The FSA announced that its overall funding will increase 9.9 per cent from £413.8m in 2009/10 to £454.7m in 2010/11.
Strange says: “The increase in the FSA’s annual funding requirement of almost 10 per cent is seven times the current rate of inflation.
“We will see a welcome reduction in the overall funding for IFAs not holding client money and the very smallest directly-authorised firms will see a reduced minimum fee of £1,000.
“However, the cost of employing additional advisers for firms with more than 26 advisers rises by up to 35 per cent. This is simply poor value for IFAs.”
FSA manager of finance and planning Mark Hunnable told Money Marketing that it is the largest networks that will see the increase in fees.
He says: “Network fees will be higher and will be subject to an increase. How individual networks choose to pass that on to their members will be a contractual issue between the networks and their member firms.”
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Readers' comments (1)
Evan Owen | 13 Feb 2010 3:29 pm
The bigger they are the harder they fall. By and large (no pun) the smaller firm is in a better position to supervise effectively and be able to track new business. My personal experience of handling IFA queries shows quite clearly that a firm with widely dispersed advisers has generated a higher proportion of complaints which are also of a higher quantum of loss. The list of issues caused by the 'network model' which some medium size firms have tried and failed to emulate is a major risk to the consumer, I could write a book on this subject.
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