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Adviser fury as FCA rejects fee compensation

Advisers have reacted angrily to the FCA’s rejection of calls to compensate advisers who have been overcharged on their fees due to an “anomaly” in the current system.

In November Money Marketing revealed the FCA fee block containing most advisers, A13, has been overcharged by £118m over the past five years and led calls for the fee block to be compensated.

The FCA said in a consultation paper on regulatory fees and levies for 2014/15, published in October, that an “anomaly” in the system means A13 advisers – those who do not hold client money – have been paying a higher fee per £1,000 of income than firms in A12, a separate fee block for advisers, dealers and brokers who hold client money.

But at a press conference this week, FCA chief executive Martin Wheatley said: “The fact there may have been a mistake is quite different to saying there was an overpayment and a need for an adjustment the following year.

“So I do not think there should be any adjustment, but if there was we would end up with a ridiculous position where we have to charge the extra from a different fee block, which would get very messy.”

Apfa director general Chris Hannant says: “I am struggling to see the difference between a mistake and an overpayment. It is incumbent on the FCA to take a proper look at this.”

Jacksons Wealth Management managing director Pete Matthew says: “It might not seem a lot of money to Wheatley, but to advisers it is a significant amount and we want to see that clawed back. Clearly this was an overpayment.”

Aurora Financial Planning chartered financial planner Aj Somal says: “This seems to be double standards. If a mistake has been identified it needs to be rectified.”

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. If you make a mistake in this life you have to correct it. An IFA would certainly be held to account. So the FCA should take corrective action which may mean reducing staff and or benefits. That’s what would happen in any other business.

  2. Looking at the flip side of this; if the regulator had made a “mistake” and had been under-charging us (fee block 13A) do you think they would not reclaim this stating it would be to messy ?

    I very much doubt it !!!

    I have written to my MP on this very subject and with regards to the money they wantonly waste on days out for board members and to outside consultancies. I don’t hold out for much other that an acknowledgement !! in this industry and under the current regulatory system have no basic human rights or force as a united voice; either from our MP’s or trade bodies.

  3. On just what basis can it be argued that “a mistake” that has resulted in advisers having been overcharged £118m over 5 years quite different from admitting that they’ve over-paid?

    The truth is that the FCA doesn’t want to accept responsibility and compensate advisers for its predecessor having overcharged us to the tune of £188m. It’s a brazen travesty and one which one would hope that an Independent Regulatory Oversight Committee, if only we had one, would summarily overrule.

  4. Of course there will be no rebate as we have seen the FCA need the money to pay for their weekends away.

  5. Yet again this highlights the unedifying fact that when it comes to fees and charges the big outfits benefit to the detriment of the small. FCA fees are but one example, APFA fees are another and the fact that (For example) Key data was not categorised as a provider was at the behest of and pressure from the higher fee blocks.

    Although I can well understand (and indeed sympathise) with the calls for reimbursement of overcharged fees, this is a rather inelegant way round the problem. Perhaps it might be more fruitful if going forward we might see some compensatory reduction in our fee block, made up by a small upwards adjustment in the other blocks. After all the money has to come from somewhere and the Regulator has already spent the income with alacrity. After all the money for £500 per night away days has to be met out of the budget.

  6. This is highly immoral and offensive. All advisers that pay the FSA / FCA need to write to their MP. If enough write it can’t be ignored……..

    The FCA will probably put up the fees in the future to raise the money to pay you back what they owe!

    Where will this end…..in tears I fear!

  7. OK Martin I’ll remember that the fact that things are messy is grounds for not dealing with them fairly . So I won’t bother with unbundling and if I get my poor clients to subsidize my richer ones that will clearly be OK too!

    This actually great news as it will certainly make the life of all IFA far more straight forward.

    Oh and by the way you could easily phase the adjustment over say 3 years so IFAs get a discount and the under payers are charged a premium over the same period. Revenue neutral for the regulator, no one gets a hugely inflated bill and justice has been seen to be done. it really would be quite simple.

  8. The FCA has been pushing the morality and ethicality buttons with regard to anticipated adviser behaviours.

    Additionally, Martin Wheatley has been at pains to distance the FCA from its unsavoury predecessor and promise changes.

    Thus far we have seen the misuse of other peoples money continue with the only change being a brazen indifference. We have seen FCA accountancy errors distort the fee brackets in an irrational and arbitrary manner yet this is too messy to put right.

    The regulator is never embarrassed by its actions and understands that, ultimately, it can do what the hell it likes because no body is able to force its hand.

    The bulk of the MPs don’t really care and it is up to the industry to say “enough is enough”.

  9. @ Alan

    I hear what you say and totally agree, the problem is the trade bodies we have don’t have the numbers or the clout, and to be fair the regulator likes and needs the trade bodies; it gives them the perception that they do listen and to a very small degree are accountable, even if they do take on board the comments made and freely reject them all with no real reasons for the rejection !

    In my view this is a rights issue, as you have correctly said MP’s don’t give a monkeys (yes they will make the right noises but little else) as any-one will confirm who has written to their MP and got a reply, our regulator is far to political, they follow a political agenda whilst giving government and the MP’s complete deniability as its “independent” in their eyes and the publics.

  10. @ DH

    Agree 100%

  11. To Alan Lakey ~ The industry can say “enough is enough” ’til it’s blue in the face but, for as long as the regulator retains carte blanche to ignore such calls which, in simple terms, are pleas for fair treatment and, in the absence of any higher authority to force it to listen and to act, our situation is one of total powerlessness. The industry or, more precisely, its representative bodies, should be directng its/their efforts towards the creation of a higher and unassailable authority with the power to tell the regulator: This is wrong and this is what you’re going to have to do to rectify it.

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