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Advisers face 15% hike in regulatory fees

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The financial adviser fee block is set to see a 15 per cent increase in regulatory fees for 2013/14.

The Financial Conduct Authority has today published its consultation on regulatory fees and levies for the next financial year.

Out of the total £432.1m FCA budget, the industry will pay £391.5m, following £40.6m in retained FSA fines. Once these discounts are applied to the A13 fee block, which covers most financial advisers, advisers’ regulatory fees are set to go up by 15.5 per cent from £32.8m in 2012/13 to £37.9m in 2013/14.

The FCA estimates the number of advisers in the A13 fee block has fallen to 7,000 for 2013/14, compared to 7,086 in 2012/13. Changes in the way the regulator calculates tariff data on which fees are based, from number of advisers to income, makes it difficult to make comparisons about what firms will pay this year compared to last year.

The FCA says around 42 per cent of firms will continue to pay the minimum fee of £1,000.

Advisers in the A12 fee block, covering those advisers that handle client money, will see a 17.5 per cent fee increase from £38.6m to £45.3m.

Fund managers face a 15.7 per cent increase from £36.1m to £41.8m.

Mortgage brokers and home finance providers will see an 11.7 per cent rise in fees from £14m to £15.6m, while general insurance brokers face an increase of 14.6 per cent from £23.3m to £26.7m. Figures for advisers handling client money, fund managers, mortgage brokers and GI brokers are shown before FSA penalty discounts are applied.

Overall the annual budget for the FCA for 2013/14 is £432.1m and the combined FCA and Prudential Regulation Authority annual budget totals £646.3m, up 15 per cent from the FSA’s annual budget of £559.8m for 2012/13.

The combined budget for the FCA and PRA has been pushed up by a £34.4m increase in frontline supervision staff costs, a £43.9m increase in IT costs, and a £27.4m increase in central services and support functions costs.

It also includes £8.6m rise in accommodation and office costs, and £13.5m increase in other costs such as Libor enforcement case costs.

FCA chief executive Martin Wheatley says: “Our first year as a new regulator will be an exciting and challenging time but one for which we are well prepared. We are introducing new approaches to the way we do much of our work, becoming much more proactive and consumer focused.

“Much of the increase in the annual funding requirement is the result of the additional resources needed to ensure the FCA delivers on its new objectives, as well as the practical costs of implementing the new regulatory structure.”

Wheatley says the increases in the budget will be borne mainly by “larger and more complex groups”, but that medium-sized firms will also see a “proportionate increase”.

He adds: “We have, however, minimised the impact on smaller firms by keeping the minimum fee at £1,000 for the third year running. The FCA recognises the difficult economic circumstances for many firms and is committed to keeping any essential cost increases to a minimum.”

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Comments

There are 20 comments at the moment, we would love to hear your opinion too.

  1. As I have said before any organisation that can simply turn the tap on when it needs extra funds from those who feed the tap is fundamentally flawed as there are no controls over the flow. In over a decade I do not recall the tap being turned off or even the flow reducing.

    It shows the new regulator is no different from the old one as far as funding is concerned.

  2. Not quite the full story.
    Adviser numbers have gone down by 25% so the increase per adviser has increased by 20% plus in real terms.
    A total disgrace.

  3. What a complete and utter disgrace.

    So much for Clegg and Camerons statement that we are all in this together.

    Pathetic is one word, I have others, but I doubt if MM would allow printing.

  4. In an earlier article MAS will be requested to justify its budget to the FCA & the Treasury.

    It’s about time the FCA justified its budget to the Treasury.

    These escalating costs cannot continue.

  5. I should further add there is a real question of ethics now the Government is using some of the fines the regulator imposes on Government objectives even if they are worthy causes.

    I had always thought the regulator was supposed to be outside of Government influence.

    Fees can only increase as long as Government sees fines as money they can use at their will rather than help reduce the cost to those the regulator regulates.

    Will the regulator now be under pressure to increase fines to help Government projects?

    Interesting times.

  6. Ivan McCullough 9th April 2013 at 12:28 pm

    The financial adviser fee block is set to see a 13% increase in regulatory fees for 2013/14.

    The new regulatory is The Financial Conduct Authority and they replaced the Financial Service Authority from the 1st April. Since the new rules came into effect on 1st January most banks have stopped offering financial advice to there customers and made there adviser redundant and we have seen a 20% reduction in IFA’s. A 13% increase must be to cover the reduced adviser numbers but we still the same amount of regulators none of them have lost there jobs. Seems unfair on those of us left trying to look after are clients?. Rant Over !!!

  7. Roman Duzinkewycz 9th April 2013 at 12:40 pm

    Yes but all you moaners will just take it and do nothing about it – get organised and make a difference you fools.

  8. Annonymous said “Yes but all you moaners will just take it and do nothing about it – get organised and make a difference you fools.”

    IFAs are not fools, we are predominantly small to medium enterprises who work hard and look after our clients needs and as most are self employed without a union representing them and inadequate or actually ineffective trade bodies with no clout there is no “getting organised ” to be done.
    I am leaving this industry, not because I want to but because I have to, to keep my sanity.

    Being regulated by people who have no concept of prudent financial management is not my idea of good business sense.

    I think I will take my enjoyable hobby of woodturning and make a viable business out of selling bowls, candlesticks and candle holders and works of art, much more satisfying and no regulatory fees.

    There ! Job Done !

  9. So much for the governments cutting back of red tape to allow small businesses to flourish !

    How many of us have seen a 15% rise in profit over the last year ?

    Unfortunately only a collective approach will change anything and divided we will moan but get on with it.

  10. I recommended Sandwich (former Pfizers Viagra site) as the new location for the FCA post 2018 when their tenancy expires. I will send an email to my MP Laura Sandys for her comment.

    As to the FCAs increased fees and passing them on to clients, we named our retainer for Clients “Regulated Premium Fee” for a reason and will be putting this up as from October 2013 when our headed paper etc has to be reprinted by and sending it out WITH a covering letter on the new headed paper including an extract of the Companies House record showing that the reprint has been due to a change of name alone (and not because the FSA was replaced, it has NOT been) and perhaps with the permission of a journal such as MM, a copy of an article like this.

  11. A five times inflation increase and no sign of these costs being moderated and what happens if another 1000 IFA’s shut up shop, will that result in another 5x inflation increase next year along with MAS, FOS, FSCS, PI costs.
    Add increased capital add requirement in 2015 which will cripple a large numbers of small IFA,s reducing numbers further, exaggerating cost ever spiralling upwards as adviser numbers decrease

  12. £34.4m extra for frontline supervision costs
    £43.9m extra for IT
    £27.4m extra for “Central services and support
    £ 8.6m extra for accomodation
    £27.4m extra for”other costs”

    As others have said – Disgraceful!

    The gravy train rolls on and on, but then again, perhaps what we are actually doing is contributing to growth in the economy, employing ever more people, renting more and more office space etc. etc.

    Symptomatic of so much else now I’m afraid.

    As for Anon @ 12.40, why does the cloak of anonymity justify insulting and abusive comments? If you have a strong view, or even perhaps some helpful suggestions, why not put your name to it?

    The combined budget for the FCA and PRA has been pushed up by a £34.4m increase in frontline supervision staff costs, a £43.9m increase in IT costs, and a £27.4m increase in central services and support functions costs.

    It also includes £8.6m rise in accommodation and office costs, and £13.5m increase in other costs such as Libor enforcement case costs.

  13. Mrs T would have loved it, closed down industry but look at all the people gainfully employed by the FCA.
    Our loss, their gain.

  14. At least a couple of mill for designing the new, dynamic logo.

  15. Actually I have been staring at it and after a while it makes you feel seasick.

  16. You know why no-one gives a s**t about fee increases and job losses within the industry, is because ‘Financial Advisors / Salesmen’ have spent the past 30-40 years ripping off the general public. Making false promises, not disclosing fee’s, churning business, taking large commissions for investments that have little chance of making any profit – these are just some of the antics I’ve witnessed…..no woder they have very little public sympathy!!

  17. This article is quite misleading and the comments unbalanced and sensationalist. It is probably why representations to MPs fail. The FCA fee is 0.6% of our turnover, using the calculator our FCA fee has fallen this year by 33%, the MAS fee by 50%.
    The FSCS levy is 2.5% of turnover or £75 per client. That is the issue.

  18. @ Michael Hunt
    Were you looking in the mirror?

  19. @ Michael Hunt – and what do you do for a living? I am on the FCA register and if you Google my name too, you can easily find me. How can I identify you from all the other M Hunt’s?

  20. @ phil castle – I used to work as a ‘financial advisor / seller of financial products’ but soon realised (after 3 months), that ripping people off wasn’t for me, so decided to join the 2nd hand car trade.

    Phil, I wish you all the best, no doubt you have taken some of your own advice and are now worth millions….

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