FCA defends 10% hike in adviser fees

FCA logo glass 2 620x430

The FCA has defended its decision to increase advisers’ regulatory fees by 10 per cent.

In a policy statement on 2015/16 fees and levies published today, the FCA confirmed that firms in the A13 block will pay £74.9m in 2015/16, up from £68m in 2014/15.

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

The regulator also confirmed its minimum fee will increase from £1,000 to £1,084, the first rise since 2010.

The FCA set out its fee proposals in a consultation paper in March.

It says it received responses from an adviser trade body, a network and 25 advice firms arguing against the increase in fees.

Respondents argued that the cost of advice has risen and access to advice is a challenge for many consumers, while the setting of fees should take into account other regulatory costs such as professional indemnity insurance and fees for other regulatory bodies.

The FCA says: “We acknowledge that our fees are a cost to financial advisers and that cost may be passed on to consumers of their services. However, we believe that the funding those fees provide enable us to meet our objectives, including protecting consumers, resulting in a benefit for consumers.

“Our fees are set to recover the funding of the resources we need to achieve our statutory objectives as set out in our business plans each year.

“To that extent they cannot be reduced to take account of the fees and levies that firms pay to other organisations. If they did then we would not be raising the funding we believe we need to meet our statutory objectives.”

The regulator says all 70 respondents to the consultation paper raised concerns over the 8 per cent increase in its annual funding requirement, from £446.4m in 2014/15 to £481.6m in 2015/16. The FCA says the rise is down to higher staff and technology costs.

But respondents argued the increase is far in excess of inflation and stands in “stark contrast” to the pressure to reduce costs in both public and private sectors.

The FCA argues the increase is necessary to meet its objectives.