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Apfa: FCA fees must reflect big fall in adviser numbers

Chris Hannant 480
Apfa policy director Chris Hannant

The Association of Professional Financial Advisers is calling on the Financial Conduct Authority’s fees paper to reflect the large fall in adviser numbers over the past year.

Last week, Money Marketing revealed for the first time the extent of the drop in adviser numbers post-RDR, with the number of IFAs and restricted advisers operating on the first day of the RDR 20 per cent down on December 2011 figures.

FSA estimates suggest there were 25,616 IFAs, tied and multi-tied advisers in December 2011, of which 21,696 were IFAs. This fell 20 per cent to an equivalent 20,453 advisers after the RDR deadline. The FSA is unable to give a split for IFAs.

An Apfa communication sent out yesterday said it was unfair to expect the remaining advisers in the market to pay the same level of fees that would have been paid previously.

Estimates based on the FSA’s recently published budget suggest that advisers could pay an extra 30 per cent in fees for 2013/14.

The FCA is due to publish its fees paper next Tuesday.

Apfa policy director Chris Hannant says: “The adviser market today cannot be expected to shoulder a burden based on its previous size. The FCA needs to ensure it factors the drop in advisers in 2012 into its upcoming budget and fees for financial advisers.

“It is vital for financial advisers that the amount the FCA asks from them is fair and proportionate, especially as they are already dealing with the costs of RDR.”

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There are 24 comments at the moment, we would love to hear your opinion too.

  1. I think we all know that for the FCA to keep up their standard of living high salaries ,pension contributions, Christmas parties and other jollies our fees will have to rise by 25% to cover those advisers that have left the industry

  2. Fair and proportionate for Advisers would mean a cut in the regulators budget which I think they would not feel fair and proportionate because they do not live in the world of financial accountability

  3. What makes anyone imagine the FCA give a stuff whether IFA numbers have dropped by 20%, both the FSA and the FCA will I am sure hike up the IFA sector fees to make up for the loss in numbers citing increased calls on their services.

    I for one am looking forward to selling up and getting out within the next year, this industry is doomed to fail the public and the IFA sector will soon only be able to deal with consumers who do not wish to DIY and have enough cash to pay the rapidly increasing costs associated with the regulators remit and the increasing burden of maintaining a profitable practice.

    AND it will only get worse, so those exponents and supporters of RDR will be able to reflect at liesure how they contributed to the demise of the iFA sector.

    Banks have got out of the investment advice market pretty sharpish for one reason and one reason only, it will no longer be profitable to trade in investments and the loss of affordable advice to the consumer will become evident in months, not years.

    (Not that I ever thought banks were suitable to give investment advice in the first place)

  4. RICHARD WRIGHT 3rd April 2013 at 9:13 am

    Ok Chris now this is the second lot of comments you have made about FCA fees on these pages. Talk is cheap, money buys houses. So rather than simply making comments, please tell us If FCA announce a fee hike what are you going to do about it?

  5. A price worth paying then eh Sir Hector? 9,000 less advisers. 9,000 families without a breadwinner, several tens of thousands no longer able to access advice.

    It will be interesting to see if Barclays still has a business in a few years…

  6. Just a reminder that the FSCS funding model is being planned to increase the cap for our class from £100m pa to £150m pa in the face of a reduced pool to pay it.

    The omens aren’t great then are they?

  7. Stephen Rowland 3rd April 2013 at 9:50 am

    RDR suppoerters aren’t quite so vociferous now!

    With Regulatory Fees spiralling & Advice seemingly as always argued would be – the preserve of the wealthy – things are as fully predicted.Numbers will continue to fall as the FSA do not want ANY adviser to make a living / profit!

    The industry in it’s cannibilism has only itself & part of the wealthy IFA section to blame!

  8. What do you expect from an organisation that has an almost unlimited tap of funds that they can turn on or off as they see fit.

    Unlike a business who has to generate revenue and profit, regulators have no such requirements, except to cover their costs, which they dictate themselves justified by the need they establish.

    If regulation was such good value for money why have we had so many financial failures especially the banking crisis when regulation was almost at it’s peak of interference?

    Let’s hope these new regulators prove their worth and costs decrease.

  9. I hope that the FCA does a better job than the FSA and if they crackdown on unauthorised advisers and websites maybe I wouldn’t be so annoyed in paying higher fees.

    Probably one of the most important aspects of RDR is how the FCA is going to enforce authorised advice particularly now there is a break between payment of fees and providers. With seen a massive increase in lead generation websites and execution only providers who I suspect do not have the proper registration with the FCA.

    I think that all IFA’s should be campaigning for the regulator to crack down on unauthorised advisers and websites. There was an article in the Daily Mail recently stating that investors no longer need advisers as you can do it yourself and attend investment classes. My question would be who was providing the investment classes and surely these individuals need to be authorised and regulated if there providing information and promoting products!

    Level playing field is what we need and proper policing of authorisation!

  10. Less numbers will only mean increased costs across the board. This was never factored in when the devised RDR and as the cost of regulation increases this will have to be covered by those of us who are left trying to survive. I might now be a so called highly skilled level 4 adviser (incidentally; I already held a level 5 qualification but that didn’t count) but I guess the cost of being so will determine if it was worth the effort for a lot of people?

  11. Scott Taylor-Barr 3rd April 2013 at 10:20 am

    As adviser numbers fall and institutions withdraw from “high risk” sectors there must come a point where any regulators workload reduces – I wonder if anyone in power has looked at what that tipping point is and what, if any, impact they have calculated this would have on budgets?

    After all, if it came down to one firm (as an extreme example) offering advice the regulator could surely not justify it’s current budget to look after it – could they?

  12. Does anyone know how many mortgage onl advisers there are and has there been a decline in the numbers.

  13. Simple Truth
    “I hope that the FCA does a better job than the FSA and if they crackdown on unauthorised advisers and websites maybe I wouldn’t be so annoyed in paying higher fees”
    You are hilarious! or Simple!

  14. Why hasn’t someone challenged the regulator over retrospective rules and regs?

  15. Duncan Disorderly 3rd April 2013 at 1:30 pm

    The (pro RDR) Bamford Boys have been quiet these last few months. Wonder why…

  16. @Duncan, they’re probably too busy working on the business to be posting pointless comments on here.

  17. Duncan Disorderly | 3 Apr 2013 1:30 pm

    The (pro RDR) Bamford Boys have been quiet these last few months. Wonder why…

    They’ve probably just been busy trying to make it all work. I suspect there will be those who were all for higher qualifications and could see the sense of RDR who feel it could have been developed better? When you go to providers for say an annuity quote and they tell you they won’t offer an adviser charging quote for that product you have to wonder where this is all going to end.

    I wish I was either 20 years younger and I could change career or I was 8 years older and could get the hell out.

  18. RegulatorSaurusRex 3rd April 2013 at 5:03 pm

    “Apfa: FCA fees must reflect big fall in adviser numbers”

    The increased cost and reduced adviser numbers can only mean one thing, fees will soar.

    The regulators must be paid whatever happens. Simples.

  19. @Duncan Disorderly don’t normally respond to anonymous comments but thank you for thinking of me as a boy!! 🙂 I was 58 last week!!

    Been very busy dealing with a record number of new enquiries coming in. 2013 looking like our second best business year in our 18 year history (last two years have been the best so far).

    Sorry @matty I did find a few moments to comment here- must try to work harder!!

    @james if the annuity provider can’t support adviser charging why not just charge the client directly?

    Lots of change still to come so we have been focused on making sure the business can cope with that. Always best to embrace change and be ahead of the curve in my experience.

  20. Julian Stevens 3rd April 2013 at 8:01 pm

    Okay APFA, you’ve made the call, but will you publish the FCA’s response (assuming it deigns to offer one)?

    And, if it doesn’t offer one, what will you do next?

  21. “@james if the annuity provider can’t support adviser charging why not just charge the client directly?”

    Not really the point. The client stated his preference was to pay for the advice via, adviser charging. The provider in it’s wisdom decided for the contract in question they wouldn’t offer that facility. We’ve had years to prepare for RDR.
    We simply went elsewhere and placed the business with a provider who did offer what the client wanted. RDR is a mess and you know it?

  22. @Nick Bamford – One of the reasons I was so vociferous about the unintended consequences of RDR (and now RDIP or lack of for some) was to make sure I had my own RDIP and saw as many of the unintended consequnces of RDR.
    I am still here doing business and studying/cpd(J07 next week and STEP in May, both of which I expect to fail due to too much blogging)
    Embracing change in a bear hug is one thing, but making love to it is quite another 😉

  23. @James 8:34am

    I agree completely. On a number of occassions now i have had a discussion with a client about how they wish to pay for advice (my understanding of the point of banning commission was that clients had to be made aware of just what receiving advice cost and given a choice as to how they pay, the point being it was their choice) only then to have to go back to them to explain that the provider who is offering the best annuity rates etc doesn’t support the option they wish to choose. We provide the choices as required by RDR then providers undermine us.

    To some degree i agree with the idea behind RDR (clarity for clients, higher qualifications etc) but the reality and implementation are eroding the ideology.

  24. Re Richard Greene, I understand the number of mortgage authorised firms has dropped from about 32000 to 8000 firms over the past 4 years

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