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.”