This comes despite the FOS’ own prediction that overall adviser complaints will not rise. Too bad for advisers facing unwarranted complaints from clients that are suffering because of the recession and have panicked about their financial situation.
This will be just another cost increase to add to the raised capital adequacy minimum requirements and the changes needed under the RDR to business models and qualifications, all while many are battling to keep their own heads above water.
On the plus side the FOS has recommended that the levy for advisers should fall by just over 12 per cent, but this equates to a relatively small saving that has not yet been approved by the FSA.
FOS has also rejected industry calls to up the number of fee-free cases from three to 10. Surely in times such as these, when the FOS is gearing up for a record year of complaints overall but no increase in IFA complaints, there is a case for doing this for advisers.
Aifa is continuing to fight this corner. Director general Chris Cummings says: “We are disappointed that the ombudsman has chosen not to increase the number of free cases from the current level. We will continue to lobby for a fairer system for advisers across the board. This should include an increase in the number of free cases to ten. The case fee can be a significant burden for small firms despite only being a fraction of the ombudsman’s case load in comparison to that of the banks and insurers.”
With of cost of running a firm skyrocketing and the availability of spare cash at a low for most, many directly authorised firms are unsurprisingly looking for additional support.
Sense Network chief executive Tim Newman says his firm has seen a big increase in enquiries from small directly authorised firms.
Newman says: “We are receiving more than eight new enquiries a week. The new capital adequacy requirements are the straw that broke the camel’s back.”
One thing I’m sure the FSA and the RDR was not meant to do was drive quality firms and their advisers out of business or prevent them from operating as autonomous firms. Unfortunately the combination of today’s tougher regulatory requirements and the pain of the credit crunch are taking their toll on many.