View more on these topics

Advisers spend 25% of turnover on regulation

Research suggests advisers are spending a quarter of their turnover on regulation.

Last month Treasury select committee chair Andrew Tyrie told Money Marketing advisers needed to produce a “robust” figure on total regulatory costs in order to better hold the regulator to account.

In response, mergers and acquisitions firm Retiring IFA has surveyed 225 adviser firms, most of them directly authorised, on their regulatory costs. It found firms spend an average of 25 per cent of their turnover on regulation, taking into account both regulatory fees and overhead costs such as compliance training.

Retiring IFA founder Stephen Hagues has written an open letter to Tyrie urging him to use the information to ensure advisers’ regulatory costs are more proportionate to the risk they pose.

In the letter, he says: “Last month you laid down a challenge to the adviser sector to prove the cost of regulation. Advisers have responded to that challenge and the figure is shockingly high.”

Facts & Figures Chartered Financial Planners managing director Simon Webster says 25 per cent is an “obscenely” high proportion to spend on regulation.

He says: “Tyrie is absolutely right to call for a robust figure and I have written directly to him offering my support.”

Apfa director general Chris Hannant says the trade body hopes to provide its own calculation on a more “systemic” basis.

He says: “The problem is people may be working out the figure on a different basis.

“The figure also needs to be replicable so we can track it on a year-on-year basis – the point is whether it is going up or down.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Shouldn’t the headline read…

    “Clients pay 30% extra regulatory premium over and above advice costs”

  2. I think before everyone gets carried away with this, clarity needs to be provided on what costs are actually part of regulation.

    FCA, FOS, FSCS fees are the obvious element, as presumably is PI – all of which are required for trading. Perhaps holding capital is a regulatory cost? Then there’s the cost of doing the job competently, which is open to much interpretation – CPD is a requirement, but not always at a direct cost, even with the FCA’s ruling on inducements.

    So… quite what goes into this cost field is a pretty broad set of figures which could be justified as regulation costs, but perhaps if the regulator was disbanded (as some commentators appear to want) how much of the training, compliance, software etc would still be used… I would suggest that most good firms would use the “kit” regardless of regulation because it helps us do a better job and manage the risk within our practices.

    This may not be what advisers and some firms would want to hear, but if you are going to come up with inflammatory headlines, you need to be clear about precisely what goes into them.

  3. Absolute rubbish. It’s about 5%.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com