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Apfa writes to Govt over ‘unjustifiable’ hike in adviser fees

Apfa has written to the major political parties to urge a rethink of what it terms an “unjustifiable” 10 per cent increase in advisers’ FCA fees.

In a paper on proposed fees published in March, the FCA said A13 advisers will pay £74.9m in 2015/16, up by 10 per cent from £68m in 2014/15.

The A13 fee block relates to advisers who do not hold client money.

The regulator is also increasing its minimum fee from £1,000 to £1,084, the first rise since 2010.

In a joint letter with the Association of Mortgage Intermediaries, Apfa has written to HM Treasury, the Treasury select committee and the finance spokesperson at each of the main political parties.

The letter says the rise in fees will “disproportionately increase the regulatory burden on financial intermediaries”.

It says: “Our two bodies support the need for a regulatory framework which protects consumers and creates a transparent and healthy finance sector.

“However, this must be done in a cost effective manner and we are concerned about the standards of cost restraint and efficiency at the FCA.

“It is not unreasonable to expect the FCA to abide by some basic standards of financial management and it brings into question the competence of an organisation that cannot live within a level budget as is necessary in business and across government.”

The letter says the increase will further restrict the availability of advice.

It adds: “We urge you to ask HM Treasury and the FCA to re-examine the case for the unjustifiable and disproportionate fee increase which will hit both consumers and the industry at a critical period.”



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There are 15 comments at the moment, we would love to hear your opinion too.

  1. I wrote to China the other day about their appalling lack of human rights !

    I suspect APFA will get the same response from the FCA !

    I think we need to go past harsh words and strongly worded letters !

    Sorry Chris you are no Emily Davison ( a great heroine of mine) !

  2. As our clients end up paying anyway, maybe they should be informed and have a right to challenge the FCA who are spending their money on things that do not benefit consumers.

    Increasing fees will not kill us off, but it will alienate the people they are supposed to be protecting.

  3. If APFA wishes to raise any issues with the government then surely the person best suited to such a task would be Lord Deben. Just what does he actually do exactly? Does anybody know?

  4. A letter from APFA is akin to being attacked by a dead sheep.

    Imagine the consternation at E14 – “OMG what are we to do? APFA has sent a strongly worded missive. . . where’s the bin”

  5. @ Peter Miss. A dead sheep dropped from the top of a tall building that misses the target.

  6. Maybe over-optimistically as regards outcome, I think it depends what’s in the letter. If they’ve used the data now available to demonstrate the increasingly obvious consumer detriment originating from the various components of the executive, it must become harder and harder to turn a blind eye to the obvious ills of the current situation.

    There is plenty of ammunition in the Apfa report itself, for a start. (I listed a whole load at,
    if anyone’s interested.)

    But apart from presenting the evidence, Apfa would have a better chance of being a credible voice for the sector if it had more widespread support in word, action and membership fees. Though as recent history shows, the chances of a united front seem further away than ever.

  7. In reality it will require a mass non-payment of levies by the whole industry to gain the F-packs attention. Of course they’d threaten us all with instant de-authorisation but I bet they’d run out of money long before most of us would.

  8. @ Ruth

    The problem with the written word (depending what is in the letter or not) is; it fast becomes history and reflected on, the outcome falls either side of the fence, utter poppycock or I told you so !

    The FCA doesn’t and will not respond to legitimate warnings from the industry (it may throw a insignificant bone every now and again), we know (or we should know by now) the RMAR reporting is a simple process for the regulator to know exactly the revenue it can skim from the industry; a) to keep them in the lifestyle they become accustomed too, and b) keep us in check by letting us have just enough to get by ! they may flower it up by saying its to do with risk and monitoring but personally I have yet to see any evidence of this !

    As for your points from the APFA report I agree, but again its has, a will turn into a “we told you so” document, purely and simply the FCA will ignore all reports other than those conducted by itself and continue on its way.

    The FCA is unaccountable, immunity is sacrosanct, and now a reliable source of revenue for the treasury, not wishing to get all “Wolfie Smith” but we are financial slaves to a master as formidable as goliath harsh words and strongly worded letters will be useless, we need to find the pebble to bring it down to earth !

  9. I don’t know why anyone suggests mass payment of FCA levies could be any sort of viable option as regards making life difficult for the FCA. There’s less than a snowball’s chance in hell of the whole industry doing that and, in any event, the FCA could doubtless borrow short term whatever it might need.

    Writing to all the major political parties will, in reality, make damn-all difference because the FCA will always fall back on a predictable raft of reasons as to why it needs more money:-

    1. The Treasury confiscates all the fines with which hitherto we were able to use to offset our total budgetary needs.

    2. New legislation has raised all sorts of new issues that pose additional regulatory demands.

    3. The government expects more from us and we can’t give do more unless we have more money with which to do it.

    4. Financial crime has become more widespread and sophisticated and that requires more resources to fight.

    All of these points conveniently overlook the key fact (and supporting data) that regulated intermediaries generally pose the lowest risk of consumer detriment. But, if you set out a long enough list of reasons why you need more money, the issue of from whom it will be extracted gets pushed out of the picture. Classic FS/CA tactics.

  10. DH and Julian, agreed, it does seem unlikely much can change without a reversal of the Treasury confiscation of fines, which does load everything in the current direction of travel. And such reversal in turn seems politically unlikely until the confiscation is re-framed from

    “ploughing funds from greedy financial companies into funding public services”
    “covertly diverting financial services customers’ money to prop up the failing monetary/budgetary policies of the incumbent government, while strangling the financial planning capability of the nation”.

    Maybe need help on making the latter more quote-able.

  11. The continual and continuing inability of APFA to achieve any recognisable victory (I am ignoring the empty claims) has transformed it into a mere talking shop where well-meaning people meet to discuss how they can deliver letters, rebukes and admonishments amid much posturing and stamping of feet.

    A real adviser body would grow claws, bare its teeth when appropriate and take legal action when due (or overdue).

  12. Peter, not convinced they could raise the funding needed for the legal costs that would entail?

  13. The primary obstacle to legal action is the regulator’s statutory immunity from prosecution, allied to the way in which the FSMA is worded which allows the FCA infinite latitude to do whatever it wants. The only solution is for the will of Parliament to prevail and for the FCA’s immunity to be revoked, again bringing us back to the need for the TSC to be granted unassailable powers of enforcement as opposed to being able merely to ask questions that the FCA is presently free to brush aside, as it routinely does.

  14. Agreed Julian. And now looks like a good time for the campaign-minded to get ammunition lined up for once the election dust has settled and key players visible.

  15. Call a spade... 24th April 2015 at 10:48 am

    As Julian says, the FCA is unaccountable. Andrew Tyrie has worked tirelessly to try to bring them to account on several issues, but the FCA has simply shrugged and said, “Whatever.” So what hope does APFA have?

    The FCA needs to be made accountable and only the government can do that. So maybe APFA should stop writing letters to the FCA and start lobbying the government. Better still, perhaps, use the power of the press, which has proven ability to embarrass politicians into doing things. If they think it’s just IFAs whingeing they will not be interested, but if you make it clear it’s the clients that ultmately pay, then those papers whose readers are adviser clients might just take notice. Put some numbers together and show just how much this is all costing clients – and how many scams are still going on, despite the FCA, leading to further costs to fund the FSCS. As Ruth says, we have an election going on just now, so what better time?

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