Informed Choice slams 51% FSA fee hike
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Informed Choice has lambasted the FSA after receiving a 51 per cent increase in fees for this year.
The firm, based in the south-east, received its regulatory fee invoice this morning, the day after Chancellor George Osborne confirmed that the FSA would be scrapped.
It says its total fees are up 51 per cent to £14,319 this year compared to £9,479 last year, an increase of 15 times the rate of inflation.
Informed Choice says it did not expect to see such a significant increase in fees despite hiring four new financial planners in the past year. It now has nine approved persons.
The firm was also surprised that the invoice included a fee of £826.80 for the Consumer Financial Education Body.
Managing director Martin Bamford says the fee hike is a “slap in the face” to hardworking advisers.
He says: “We are extremely unhappy about the scale of this fee increase and the sudden appearance of a levy for the Consumer Financial Education Body.
“This level of fee increase represents a slap in the face for advisers who have been working hard to reduce regulatory risk within their business and make the transition to a modern advisory practise.
“The regulator is going to alienate a lot of those advisers who were previously supportive of their work with actions like this.”
The FSA insists the funding of the Consumer Financial Education Body was consulted on.
A spokeswoman refused to comment on Informed Choice’s fee invoice specifically, but says the new fee structure is “fairer and more transparent”.
She says: “The annual funding requirement for 2010/11 reflects the FSA’s determination to continue delivering intensive supervision and the substantial international regulatory reform agenda.
“The introduction of a fairer and more transparent fee structure means 60 per cent of firms will actually pay less, as the increased cost of intensive supervision will be levied on those firms whose size and impact require the most regulation from the FSA.”
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Readers' comments (13)
Nick Bamford | 17 Jun 2010 12:28 pm
Can you go back to the spokesperson at the FSA and ask for a more meaningful explanation of this fee hike?
Does she really believe that a modest sized firm that has achieved corporate chartered status, embraced RDR changes and embedded TCF in its core represents a firm "whose size and impact require the most regulation from the FSA?"
What on earth have the 60% who are actually going to pay less done that we have not? I really think we need to be told.
This is a firm that believes strongly in robust regulations as a plank of consumer protection.
I am afraid that the FSA spokesperson is talking utter nonsense.
Nick Bamford
Chief Executive
Informed Choice Ltd
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Julian Stevens | 17 Jun 2010 12:55 pm
"The FSA insists the funding of the Consumer Financial Education Body was consulted on." Okay, and what was the feedback it received? And what if any notice ws taken of this feedback?
You may have to increase your hourly fee rate, Nick, which hardly seems like a good recipe for increasing consumer access to advice.
“The regulator is going to alienate a lot of those advisers who were previously supportive of their work with actions like this.” Yeah ~ all three of them. The only way out, as I and an increasing number of other firms see it, is going to be to get out to an alternative regulatory jurisdiction.
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You must be joking | 17 Jun 2010 1:04 pm
I have total sympathy with Nick and Martin, especially having followed much of their work over recent years - they obviously run a firm at the forefront of financial planning and pose considerably less risk to both clients and the "Financial system" than many other advisers and, more importantly the banks.
The one amusing aspect of the article is the FSA spokeswoman's comment "a fairer and more transparent cost structure".
This reminds me of the current "Unbundled" Platform arguement... let us unbundle because it is fairer and more transparent... oh, and more expensive!!!
Nick and Martin, good luck with getting some "sense" out of the fSA!
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Doug Brodie | 17 Jun 2010 1:11 pm
Our increase this morning is 7.5%, based on our eight advisers unchanged from last year. Like Nick, anything that's asked of us, we do, be it RDR, TCF, FSA matrices et al.
Clearly the FSA's £22m in bonuses must be funded, but key questions should be asked as there is a structural problem in the way the FSA works.
First question is 'what is the risk posed through the business conducted by Master Adviser?' (Or Informed Choice or a host of others). An experienced glance of our new business register will speak volumes to those who know what they are looking for, the problem being that so many in the FSA simply don't.
We actively encourage a close relationship between our firm and the FSA, and were on of the first to host an FSA supervisor for a week's 'Meet the IFAs' experience. Lovely person, but had joined straight from Uni into the FSA's pension review team, and at 28 was now supervising small/medium IFAs. When asked what experience the supervisor had personally had with sources of financial advice the response - quite bluntly - was that it wasn't our business. Quite. The person had no clue what to ask for, what part of our business should be seen, and no idea at all of where to look for risks and what they would like if they were present.
£22m bonuses - I thought staff were paid to do their job? Isn't that what a salary is for? Good management reward staff, and if it is only by cash that staff will stay then their is a significant shortfall in management ability. Is it right that a regulator should use a mechanism created to reward super-profits in commerce? No.
It is an appalling indictment on the controllers of the FSA that they have run such a key national organisation in such a way that the government effects its dissolution. The unspoken summary of the FSA is 'not fit for purpose'.
In such a time when the FSA has been caught so embarrassingly & publicly asleep at the wheel, and in an embryonic recovery, they don't have the professional intelligence or empathy to cut the bills to the risk free sectors.
That's simply because they still have no idea at all where the risk lies. I'll give you a clue Mr. Sants, just look who's earning the money.
Lastly, I don't object to the cost of regulation, I just object to wasting money that would be much better spent building solvency in our firm.
Doug Brodie
MD, Master Adviser IFA Ltd
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terry | 17 Jun 2010 1:23 pm
What did one expect with salaries and bonuses etc beyond most of the general publics wildest dreams. They certainly live in another universe compared with the majority.
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Tom Scott | 17 Jun 2010 1:42 pm
The only solution now is to make a total nuisance of yourself with your MP. Send them this article, send them your FSA bill, send them the news story about the £22m bonus.
It is the only way this can ever stop.
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terry | 17 Jun 2010 2:17 pm
Re. Tom,s comments. If only the MPs would listen. I have spoken to MPs in the past about the way the financial services are going and they seem totally oblivious to the outcome of what the FSA does. Perhaps they were more concerned how to milk as much money out of the system via their "Legitimate expenses" in their eyes. The top echalon have too much power and too many mates in the right places. How the heck Sants can continue in any sort of employment either with the new regulator or the Bank of England, when you consider what has happened under his watch I will never know
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kim | 17 Jun 2010 3:56 pm
I haven't received my fee invoice yet, so can't comment on whether I am better or worse off than last year. However, I used the FSA online calculator to estimate the fees that I would need to pay this year. Advisers also had to make a decision before 31 March whether they wanted to cancel their authorisation or commit to the next years fees.
As advisers we have to declare our remuneration package to the client before any work is undertaken, and they then make their decision whether to proceed or not. However we are expected to make a decision on an estimate which is then disclosed to us some months after our decision is made, and it would appear may be erroneous, and significantly higher than expected. Where, then, does CAR and TCF come into the FSA remit??
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Phil Castle | 17 Jun 2010 4:12 pm
My bill hasn't arrived yet either. at first read, IU thought Informed Choice's bill had gone up because of an increase in adviser numbers, but Doug's has gone up with no increase in numbers it would appear.
I can't remember agreeing to pay for the consuemr education body. I suspect I was told I'd be paying, but dictating something is not a discussion and definately NOT an agreement.
Refusing to pay your FSA fees is not an option unless you intend leaving the industry or have enough money behind you to fight and risk loosing. What we decided to do was start charging clients a retainer which we describe as a regulatory premim fee (RPF) which is related to the costs of being in business which are dictated to us (F-pack fees, PI, IT costs etc) that way we can inform clients once a year why their fees have increased (or decreased HA, HA). This fee then bears no resembelance to the advice given/profit made by us and has nothing to do with "funds under management", it is a simple flat fee for remaining an authorised firm for the client. If too many decide to stop paying it, then we simply will not be here anymore, but hopefully clients will start to question the true cost of regulation when we remind them at every review what this money is for....
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Will | 17 Jun 2010 4:23 pm
I have every sympathy with Nick and Martin but if they expect a 'reasonable response' from the FSA on this (or any other matter) then pleae guys don't hold your breath. Every single piece of correspondence we have sent to the FSA regardless of it's simplicity ilicits the same bland ignorant response. Currently we are trying to determine what our firm's max exposure to FSCS levys are: The question? "Please tell us what our firms maximum exposure to FSCS levys are? After 8 yes eight letters we have not had a straight answer. Watch this space.....
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