View more on these topics

FCA halves Budget guidance levy for advisers

The FCA is proposing a 50 per cent reduction in the levy charged to financial advisers to fund the guidance guarantee service.

The regulator says it recognises that it is not clear whether advisers will benefit from the guidance guarantee and they should therefore pay less than firms which will clearly benefit, such as banks and life insurers.

The FCA is proposing that the levy should be split between the five fee blocks which it believes will benefit from the guidance: deposit acceptors (A1), life insurers (A4), portfolio managers (A7), managers of investment funds and operators of collective investment or pension schemes (A9), and advisers who do not hold client money (A13).

However, advisers will pay 50 per cent less than the other fee blocks.

The FCA says: “In our view, the key reason put forward for allocating less to A13 was that, whilst it is clear that banks/building societies, life insurers and portfolio managers can benefit as the monies released through pensions flexibility (if used for investment) will be distributed amongst them, the benefit was less clear in the case of financial advisers.

“Financial advisers will only benefit if, following using the pensions guidance service, consumers seek advice from regulated financial advisers.”

In a consultation paper in July, the FCA proposed three options for allocating the levy across the five fee blocks: the first was to base it on the FCA’s annual funding allocation, which would have seen advisers pay the largest proportion of costs at 30 per cent.

The second option was to split the levy equally so each fee block pays 20 per cent of costs, and the third was to allocate costs in line with what retirement products and services consumers choose.

Apfa hit out at the proposals, describing them as “inappropriate”. Providers including Aviva and Standard Life also argued it was unfair to load the cost of the service onto advisers. 

FCA guidance levy table 1.jpg
FCA guidance table 2.jpg

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. well done and thank you Ken Davy

  2. Apologies I must have been working seeing clients when the announcement came out that we were to help fund the guidance guarantee fund.

    This is a serious question does anyone know what the monetary amount will be that it is proposed to be that is being reduced by 50%?

    Also how is this principle that advisers will benefit from this so we should contribute arrived at. We are perfectly happy with the amount of clients we currently look after with regards to their pension planning so we aren’t looking to ‘benefit’ from these recent changes. Has the decision been made? Or who do we raise our two penneth worth with (and please don’t say my MP because my MP never bothers to reply and neither does Steve Webb).

  3. Well I’ll go to the foot of our stairs, did not see this coming, best we all say thank you for some common sense and listening to our objections.

    Would be nice if we had no additional levy, but I am sure another one will be coming our way in the near future.

  4. Great news and a helpful acknowledgement of our position in all of this. I guess it would therefore appear disingenuous to question why we should pay for it at all.

    I will be interested to see what the budget for this service will be, as it may still have a significant and disproportionate impact on our overall cost of regulation.

    If a service costs me say, £3,000 a year and I don’t see £3,000 of corresponding fee income for this, then I would sooner not offer it; maybe I can just opt-out of the ‘regulated’ pensions advice bit of my FCA membership, save myself the proportionate regulatory cost and thereby just give unregulated ‘guidance’ like all of these other bodies (but obviously on a professionally qualified basis!).

    If the cost turns out to be £15 a year, just ignore all of the above, I’ll take that on the chin!

  5. We shouldn’t be paying anything at all !!!

    This just George Osborne using, not only us IFA’s but the industry as a cash cow, for his ill conceived ideas !!

    Bloody cheek ! if you ask me

  6. While this is reduction is to be welcomed, being a simple adviser I would like to know IN POUNDS AND PENCE Mr FCA how much my 12% will be. Unless I have been asleep at the wheel and have missed the announcement confirming what the total annual bill will be?

  7. @Marty in the FCA Policy Statement PS14/17 Retirement Reforms and the Guidance Guarantee including feedback on CP14/11 page 39 Annex 2 (sorry for that mouthful) the FCA passes responsibility for a Cost Benefit Analysis back to The Treasury

    As far as I am aware the Treasury has not done one

    Still we will know how much when the bill lands on our doormats 🙂

  8. apparently If you only pay the minimum regulatory fee then you wont contribute at all.

  9. Welcome news but we shouldn’t be paying it at all. Yet more costs imposed on us and our clients.

  10. 12% vs. 30% is a 60% reduction, not 50% but, as others have asked, 12% of just how big a total bill? And anyway, why not direct consumers, as a first rather than second step, to where they’ll be directed ultimately and can be given their initial guidance FOC without us having to pay some other body to do it?.

    That said, there’s not much more that the FCA can do abut it, given that the GG has been dumped on them by the Treasury.

Leave a comment