The Financial Conduct Authority has watered down plans to reform the way firms are levied to fund the Money Advice Service resulting in higher adviser levies than 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 cost for firms in the A13 fee block, which covers most advisers, would fall a massive 93 per cent from £4.6m to £300,000.
Mortgage lenders strongly opposed the plans, which would have seen their MAS costs soar from £1.1m to £15.5m.
In the FCA’s consultation on 2013/14 regulatory fees and levies, published this week, the regulator says the change to allocation costs was being introduced too quickly.
The MAS has 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 method, advisers in the A13 fee block will see their fees go from £4.6m to £2.7m, a fall of 42 per cent.
Investment Quorum chief executive Lee Robertson says: “I personally never believed we would see a 93 per cent fall in MAS costs. Regulatory costs never seem to work that way.”
Separately, the FCA has confirmed the budget for the Financial Ombudsman Service at £283.6m, up 93 per cent from £147.2m for 2012/13.