Aifa and the Institute of Financial Planning have called on the FSA to link regulatory fees to risk as the two bodies hit out at plans to base fees on firms’ income.
Aifa director general Stephen Gay says: “Income-based fees can run the risk of decreasing efficiency and productivity in the profession, punishing firms that have built successful, profitable businesses with higher than average ratios of income per adviser.”
He argues many successful firms have invested more in compliance and research, meaning they pose less regulatory risk. He says: “Aifa has consistently called for a fee regime based on a risk-based approach. This must be the overriding principle of the FSA’s approach.”
IFP chief executive Nick Cann says: “Surely, the new regime gives the regulator the opportunity to think a little more creatively about what it is creating and to consider other factors like risk as well as the shape of the business. At face value, it seems a decision has been taken to penalise successful businesses.”