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.