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Advisers fear £4.2m guidance levy will be ‘open cheque’

Advisers fear the cost of funding the Government’s flagship guidance service will be an “open cheque book” after the Treasury announced it will recoup extra costs from the industry if the bill exceeds its £35m estimate.

In an update published this week, the Treasury said the guidance service, which is to be called Pension Wise, will cost £35m in 2015/16.

Under current proposals, advisers are set to pay 12 per cent of the running costs, equating to £4.2m.

Set up costs for the service were covered by a Treasury loan. Original plans had the advice sector paying 30 per cent of costs, the largest proportion of any industry, before the FCA backtracked.

If the bill for guidance exceeds the estimate, the Government will cover the excess and recoup the difference from the following year’s levy, it says.

Jacksons Wealth Management managing director Pete Matthew says: “My biggest concern is the open cheque book nature of the levy. I do not have a massive amount of confidence this will deliver value for money, given those delivering the guidance will not have pensions qualifications.”

Aurora Financial Planning chartered financial planner Aj Somal says: “As business owners we need more certainty on what the levy will be each year.”

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. If this was ‘What happened next?’ round on ‘Question of Sport’, I’d be feeling fairly confident at this point.

  2. Meanwhile the FCA an other self appointed “experts” question my fee/remuneration model?

  3. It does not seem right to have to pay a penny towards this service as an adviser but I am quite happy if some of my taxes go towards the provision of Pension Wise. It makes no common sense at all for me to pay for this service just because I give financial advice. It is a public, statutory service so the taxpayer should pay for it.

  4. Whatever happened to Osborne’s £20m pledge? Quietly swept under the carpet as far as I can tell.

    £20m George? Bit of a cock up there, it’s going to cost a shedload more than that.

    Oh well, just bill the FS industry instead, they have bottomless pockets and no powers (other than by committing commercial suicide) to refuse.

  5. Why are we, the adviser community, being charged anything. I agree, the service is a reasonable idea but should be paid from taxes, not from minority groups that it has nothing to do with.

  6. The FCA will not allow a legal entity to deauthorise without their permission, BUT if you are a Ltd Company and Companies House strikes you off that’s that.
    If however you are a sole trader, partnership or network member (as you invariably sign a guarantee to the network), you cannot cease to exist without dying or financial dying (bankruptcy). So the Treasury saying they will meet the cost of any overrun and then levy the overrun (which has no Parliamentary scrutiny on the cost) will make any sole trader or partnership much like a Lloyds Name, only it will be joining the infinite time of no longstop with an infinite cost.
    As Brian Gannon says, it is one thing for this cost to be met through (My) general taxation, but quite another to force me to find something neither I nor my clients will benefit from.

    Basically I am NOT going to pay if the “Pension Wise levy” appears as a separate item on the FCA levy bill. I will send them separate payments for each itemised amount and if the FCA want to try and remove my authorisation as a result of not paying something they have been told to collect but is deemed separate from the services they provide us (we after all pay them to regulate us), so be it.

    If it is not itemised separately I may have to think again.

    OK, everyone else reading this, is it about time you stopped moaning and actually said what you will and will not pay.

  7. Up the revolution Phil!
    I agree entirely and wished we, as a community, had a strong enough singular voice to do exactly as you state. I will lobby SimplyBiz members to see if I can get them onside!

  8. No one else willing to put their head above the parapet and move from using their mouth to risking their livelihood and wallet then?

  9. Phil, all power to you but make sure you keep the money for the levy in the bank just in case its pay up or close up!

  10. If it comes to a head, I can always make the cheque payable to HM Treasury or “Pension Wise” and not the FCA as the FCA are only the debt collectors on behalf of someone else.
    Drug Trafficking Money laundering and the proceeds of crime and all that.
    If the FCA want to remove our authorisation for that, that is their choice.

  11. Why don’t the government just spend the £30 million they are paying (borrowing to pay I should say) on £150 vouchers that can be paid to IFA’s to provide this guidance? This would give over 200,000 people the chance to get proper advice from a professional. The government would have no set up costs, no risk, and would only have to pay for those who actually bother to ask for it. Plus most IFA’s I assume would be higher rate tax-payers, so the government will get 40% of it back anyway!

  12. @ASBO – That is too sensible…. as it would work.

    For example I have two apprentices, one has completed R01, CF6, ER1 and R05 and failed R04 by one mark, but will resit that after the new tax year as well as R03 and R02 before deciding on R06 or CFP, for a £150 voucher, he could provide guidance based on a decision tree provided by “Pensions Wise” in my office OR by webcam and if at the end of the guidance meeting the consumer feels they want and are willing to pay for advice, one of the apprentices could wheel me in at an agreed fee for the advice.

    Why are the PFS and FCA NOT pushing for this? Instead, the FCA are acting as TAX collectors for the Treasury and Osborne’s politics.

    Come on other adviser, commit to just not paying it to the FCA, make the Treasury/HMRC have to charge it, it is their idea, even the FCA didn’t want to be given this to do.

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