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FCA rejects calls to compensate advisers for £118m fee ‘anomaly’

FCA chief executive Martin Wheatley has rejected calls to compensate advisers who have been overcharged on their fees due to an “anomaly” in the current system. 

In November Money Marketing revealed the FCA fee block containing most advisers, A13, has been overcharged by £118m over the past five years and led calls for the fee block to be compensated. 

The FCA said in a consultation paper on regulatory fees and levies for 2014/15, published in October, that there is an “anomaly” in the current system and proposed merging the A13 and A12 blocks to correct it.

Earlier this month Apfa also called for the regulator to compensate firms that have been paying a disproportionate amount under the current fee system.

But at a press conference in London yesterday, Wheatley denied A13 advisers had been “overcharged”.

He said: “We work out our fee blocks every year, and the fact there may have been a mistake in one of the fees is quite different to saying there was an overpayment and a need for an adjustment the following year.

“So I do not think there should be any adjustment, but if there was we would end up with a ridiculous position where we have to charge the extra from a different fee block, which would get very messy.

“We have to collect our fees and we end up with zero at the end of the year, it is not as if we have a lot of reserve funds.”

The FCA said in its consultation paper that the “anomaly” in the way the A13 block interacts with A12 means that A13 advisers – those who do not hold client money – have been paying a higher fee per £1,000 of income than firms in A12, a separate fee block for advisers, dealers and brokers who hold client money.

This is despite the fact that firms which hold client money require greater regulatory scrutiny.

The regulator proposed merging the A12 and A13 fee blocks for 2014/15, meaning A13 firms would pay a lower fee per £1,000 of income. Firms which hold client money would pay an additional fee.


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

  1. Derek Bradley ceo Panacea Adviser 14th January 2014 at 9:07 am

    As I understand it Mr Wheatley places great store in regulated firms and individuals asking themselves if their actions are morally correct.

    A question to ask of himself and the staff who created this anomaly I would suggest.

    Wheatley says “We have to collect our fees and we end up with zero at the end of the year, it is not as if we have a lot of reserve funds.”. Why is that? Because they take money from regulated firms then find a way to spend it as quickly as possible, not conserve it or ensure value.

    I am deeply disturbed that such a large amount can be dismissed as an anomaly. I think APFA may have to consider some drastic actions to counter this if these assumptions are correct.

    Should advisers withhold fees if they can demonstrate an overcharge? Should APFA support such action?

  2. Disgusting, absolutely disgusting. Can yopu imagine their reaction if an adviser firm, who had made a “mistake” in their fee charging structure, decided it would be messy to fix and pay them back what they have paid over the odds for due to the firms mistake? It would be all over the headlines…. “FCA steps in to force adviser firm to pay back the money it overcharged some clients”.

    Mr Wheatley just how would it be ridiculous that those who should have been paying the higher fees, but were not, now pay the correct amount and those who have paid too much, pay a reduced amount? The end figure would be the same.

    I think this shows you now in your true colours. No matter what the regulator screws up, they are never to blame and not accountable for their actions. It makes me feel sick.

  3. Compensated how? Robbing Peter to pay Paul? Cutting fees ongoing? Funding the FCA out of general taxation a la the the various utility and other regulators?

    Somehow I doubt it.

  4. Well maybe they should say for the next few years, fee block A13 firms should be given a slight discount and the firms that hold client money should temporarily pay extra.

    Either that or say as per our example, it is now ok to accept fault but avoid liability if you have no capital adequacy.

  5. My Mum obviously taught a valuable life skill from a young age by telling me ‘do as I say, not as I do’.

    Who knew it would be so entirely appropriate my adult life!

  6. When they came up with the idea of a regulator I wonder if this is what they had in mind? A body of the old school network with little or no financial services experience who say one thing but practise another. I doubt they did; but here we are and its endemic across most regulatory bodies that are supposed to protect the interests of those they claim to serve. The fact they’ve now supposedly spent the money is no excuse They are being accused of overcharging advisers and someone in a high place needs to address this and fast. What planet is this guy actually from I wonder?

  7. What does one expect from an unelected unaccountable quango. Be interested to see how much was paid in bonuses and Christmas parties in 2013

  8. “do as we say; not as we do” springs to mind !!
    The regulator deals a very firm hand to us all, with its own “miss-selling” scandal

    Justice ? not on your nelly !!!
    Will Martin and his band of pirates forgo their bonuses ? of course not; they work in the same way as any other quango spend your budget or loose it !!

    We are an industry totally controlled with no voice a “dancing bear” if you will; and milked for the bile we produce !!!

  9. Totally immoral stance by the FCA, as usual. Guaranteed never to do the right thing.

  10. Consider an equivalent overcharging “scandal” involving any commercial operation, where the perpetrator had admitted its transgression in open forum.

    Would not a standard response be to stonewall, then backtrack, and finally refund the overcharge, with interest, so as not to get CMCs all over it. Perhaps a modicum of professional face may be saved in so doing.

    Not these chaps at our esteemed regulator. They do not need to be respected for acting honourably.

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