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Advisers slam ‘ineffective’ FCA over 10% fee hike

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Advisers have criticised the “ineffective” FCA after the regulator defended a 10 per cent increase in advisers’ fees.

This week the FCA confirmed that firms in the A13 block will pay £74.9m in regulatory fees in 2015/16, up from £68m in 2014/15. The A13 fee block relates to advisers who do not hold client money.

The regulator also confirmed its minimum fee will increase from £1,000 to £1,084, the first rise since 2010.

The FCA first set out its fee proposals in a consultation paper in March.

It says it received responses from an adviser trade body and 25 advice firms arguing against the increase in fees.

Respondents argued that many consumers cannot access advice and said fees should take into account other regulatory costs.

The FCA says: “We acknowledge that our fees are a cost to advisers which may be passed on to consumers. However, we believe those fees enable us to meet our objectives, including protecting consumers, resulting in a benefit for consumers.

“Our fees are set to recover the funding of the resources we need to achieve our statutory objectives as set out in our business plans each year.

“They cannot be reduced to take account of the fees and levies that firms pay to other organisations.”

The FCA’s three overarching objectives are consumer protection, protecting and enhancing the integrity of the UK financial system, and promoting competition.

Informed Choice managing director Martin Bamford says: “I am willing to pay more for regulation to protect consumers, but only if we see the results of that. The fact that Financial Services Compensation Scheme levies are increasing shows the regulator has been ineffective in protecting consumers.”

Investment Quorum chief executive Lee Robertson says: “There is a real concern about the rising cost of delivering advice. That means more and more consumers will choose to do it themselves, and will not be protected from potentially poor decisions.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. I agree with both Lee and Martin and I would add that ultimately it is the consumer who pays. If the Regulator’s poor budgeting (or disregard for costs because they are not accountable), results in detriment to the public, who is it they are supposed to be serving?

  2. It’s all about TCF and transparency, with cost being the biggest issue apparently.

  3. Its not the FCA fee hike you all need to stress over. The FSCS element has gone up massively more than that.

  4. Dear Editor

    When are you going to get your act together and reinstate the e-mail alerts on posted topics. It is now impossible to follow a thread and reduces the value of the comments and the quality of debate.

  5. If recent reports are true and accurate, the FCA lead the complaints tables ! and rather spooky enough, not one of these complaints have been found justified ?

    Now, I do find the first very easy to believe but not the second, so this leads me to; are the FCA effective and “deserve” to be setting there own budgets ?

    Well the answer is a resounding no, however this is not the point, the whole industry is wrapped up in the FCA Dogma, and we know, said authority laid down these principles as incontrovertibly true, these cannot be changed without effecting the FCA’s paradigm or ideology itself !

    So here you have an industry locked into financial slavery with a master who is infallible as the almighty himself, totally immune from any kind of prosecution or challenge.

    And we live in a free democratic society, with free will and rights ?

    By and large we moan about the wrong things (myself included) and the knee jerk reaction needs re-channelled else where !

  6. Seems that the FCA will continue to push up the cost of advice, and also want to squeeze out the Execution Only route. I wonder how many small investors would be left if it was down to them.

  7. Were any bookie to offer odds on the FCA taking a scrap of notice of any of the responses to its consultation on this (and pretty much any other issue), you’d be lucky to get 10,000:1.

  8. Andrew Pritchard 26th June 2015 at 3:06 pm

    Whenever there is a consultation initiated by the FCA there is a low response rate. This is mainly because most advisers see this as a sham, just a way for the FCA to appear to be listening. It always does whatever it wants as there is nobody to hold it to account.

    The FCA has put ‘consumer value for money’ at the heart of its message for the last 2 years, but is blindly ignoring its own impact on the costs that advisers incur, and therefore pass on to their clients.

    I have no magic solution to offer, but I would like to see comparisons between the average income of an adviser and the average income of an FCA employee (including all the various employee benefits), and the average qualification levels of both as well, to begin a debate about the cost effectiveness of the FCA.

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