The Financial Conduct Authority has watered down plans to reform how firms are levied to fund the Money Advice Service resulting in a less significant fall in advisers’ total MAS levies than was first expected.
In January the FSA consulted on allocating MAS “money advice” costs based on its data of how consumers use the service. The regulator initially suggested this could mean the total costs for firms in the A13 fee block, which covers many advisers, falling a massive 93 per cent from £4.6m to £300,000.
Mortgage lenders strongly opposed the plans, which would seen their MAS costs soar by 1309 per cent from £1.1m to £15.5m.
The FCA now says the change to allocation costs based on consumer usage was being introduced too quickly.
The MAS has since proposed a revised cost allocation basis for 2013/14 which will use a mix of the consumer usage method and the current allocation method to fee blocks, split 25:75.
Under the revised cost allocation method, advisers in the A13 fee block will see their fees go from £4.6m to £2.7m.
Mortgage lenders will still see a significant increase to their total MAS costs, but not as dramatic as first proposed, with their bill going from £1.1m to £4.3m.
The FCA says: “We believe the revised approach addresses the concerns raised by the industry that the pace of change to a consumer usage method was too quick and the transfer of burden too significant for the notice period given.
“It also allows more time for further consideration to be given by both the MAS and the industry on how a consumer usage method should operate and the extent to which there are alternatives or a mixture of more than one method.”