Advisers have hit out at suggestions the FCA could intervene on adviser charging by imposing a cap on the cost of advice.
Writing in this week’s Money Marketing, Adviser Advocate chief executive Richard Leeson says advisers need to address the discrepancy of percentage-based charging where wealthier clients pay more for the same advice service as lower value clients.
Leeson argues this issue will come to the fore where the same client increases their level of investment significantly and sees the difference in advice charges for themselves. He adds percentage-based charging could also prove problematic in the decumulation stages of large pension pots.
Leeson says this may lead the regulator to step in if it feels charging structures are driving negative consumer outcomes.
But Yellowtail Financial Planning managing director Dennis Hall says: “The market should surely dictate what the price should be. You cannot impose a unilateral cap across the country – it is unviable. The FCA may eventually prevent advisers taking their charge from the product. But a cap would be quite a blunt tool.”
Evolve Financial Planning director Jason Witcombe says: “The wider advice market is tackling this already. There should not be a carte blanche approach on what we should be charging. Many firms operate a tiered charging structure, so although wealthy clients pay less as a percentage than those with less to invest, in pounds and pence terms they pay more. To me, that seems reasonable.”