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Adviser fees fall 19% after FCA fee-block reform

FCA fees will fall next year as a result of changes to regulatory fee blocks for firms that hold client money. 

Many firms currently fall into the A13 fee block, which relates to advisers who do not hold client money. 

A separate fee block, A12, exists for advisers, dealers and brokers who hold client money.

In a consultation paper on 2014/15 regulatory fees, published this week, the FCA is proposing charging A13 advisers £68m in 2014/15, down by 19 per cent from £83.6m for 2013/14.

This is the result of proposals, announced in October, to merge the A12 and A13 fee blocks. 

The regulator is also creating a separate fee block, A21, for firms carrying out investment business where their permissions include safeguarding or administering assets.

The FCA is proposing charging A21 firms £13.4m in 2014/15 and keeping the minimum fee at £1,000 per firm.

Forty-two per cent of firms paid the minimum fee in 2013/14. The regulator raised £18m from minimum fee firms in 2013/14 and aims to raise the same amount  in 2014/15.

The FCA says the fall in fees for A13 advisers is also due to how the 2013/14 fees included a £3.7m one-off amount to cover the three-year RDR project costs.

In October the FCA said there was an anomaly in the way the A12 and A13 fee blocks interacted. This meant that firms that held client money were paying a lower fee per £1,000 of income, despite requiring less regulatory scrutiny.

Money Marketing revealed in November that this resulted in A13 advisers had been overcharged by £118m over the past five years. 

FCA chief executive Martin Wheatley has rejected calls to compensate advisers who were overcharged, saying an admission of a mistake is “quite different to saying there was an overpayment”.

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