Advisers have welcomed “common sense” proposals to reform how the Money Advice Service is funded, which will see advisers’ total MAS levies fall 93 per cent from £4.6m to £300,000.
The FSA published a consultation this week which says the cost of the MAS’s “money advice” resources should be allocated to the relevant FSA fee blocks based on MAS data of how consumers use its services.
Under the proposals, the total cost of funding MAS for firms in the A13 fee block, which covers most advisers, will fall a massive 93 per cent. Firms in the A18 fee block, which includes mortgage brokers, will see their fees fall from £1.6m to £300,000.
But costs for mortgage lenders will soar by 1,309 per cent from £1.1.m to £15.5m. The figures are based on data which suggests 2.6 per cent of consumers who use the MAS do so for financial advice, while around 30 per cent access MAS for help with getting a mortgage.
Plan Money director Peter Chadborn says: “The phrase that springs to mind is ‘common sense prevails’. It shows how imbalanced the system was in the first place. I am not against the concept of MAS, but I and no doubt other advisers have resented the fact we have to pay so much for it for no direct benefit.”
Yellowtail Financial Planning managing director Dennis Hall says: “This is certainly a better approach and a lot fairer. Clients have indirectly been paying twice – once for their own advice and again for subsidising the costs of those who do not pay for advice.”
But Council of Mortgage Lenders director general Paul Smee says: “Lurches of this magnitude in budget allocation are most unwelcome to firms, especially when based on an unproven methodology. We are going to be examining these proposals very critically.”