Tony Byrne, IFA view
We have just paid our annual fees to the FSA. For a firm of just three registered individuals, this cost us 10,500.In addition, we have toiled over our half-yearly online RMAR form and submitted it to the regulator. I am not at all happy that our fees were based on the number of advisers we had on January 1, 2006, that is, four, but one of them left just two months into the New Year. A new adviser joined us last November. The result is that our fees are about one-third higher because we are deemed to employ four advisers when in fact they were both employed by us simultaneously for just four month. I estimate our fees are about 2,500 higher as a result. About half of our fees arose from the Investors’ Compensation Scheme so we had to pay over 5,000 for other companies’ misselling and business failures. This from an organisation which encourages complaints against IFAs and boosts its own coffers with thousands of case fees every year for complaints (via the FOS) whenever it changes the rules retrospectively and blames IFAs for “misselling” with the benefit of hindsight. On top of this, the FSA has increased its fees to fund the shortfall on its final-salary pension scheme when the rest of us mere mortals have to accept the ups and downs of money-purchase schemes. In the news recently, intermediary firm Thompson Prior has been questioning the FSA’s right to require intermediaries to treat their customers fairly when it does not appear to have applied the same rules to its small-firm customers. Basically, the firm is in dispute with the FSA over the amount of fees it has been charged based on the number of advisers employed by them. It claims to have advised the FSA of one of its partners leaving the firm but has still been charged fees based on the original number of advisers. Prior says: “Apart from being furious about the mistake and the absolutely uncompromising attitude of pay or else, we cannot believe that an organisation which is plugging treating customers fairly can be so obdurate.” If you thought you were living in a democracy, think again. The truth is that the FSA is a typical Government Quango. It is wasteful, extravagant, employs too many people, occupies expensive property at Canary Wharf in London, is ineffective at regulation, inefficient and consumed by red tape. The RMAR is a virtually impossible form to complete successfully. It took me hours to complete it and submit it online and I am an IFA and ex-accountant. But I know this is a gripe of many firms. I feel that there are probably a plethora of mistakes in the new RMAR reporting structure as a result of impenetrable or at least ambiguous FSA terminology and timescales allowed for completion which can often lead to panic as one nears the deadline. In addition, the FSA’s “self-auditing” modules within the RMAR give rise to increasing levels of complexity. As such, what I mean is just because one completes a single form correctly and it is accepted does not mean that the entire RMAR will be accepted. Also, intricacies in gathering data may mean that we get uncomfortably near to the completion deadline. With the old paper-based structure, we had some flexibility. It is high time that the regulatory system was overhauled because the FSA clearly is not performing its role effectively. It is an all-powerful judge, jury and executioner. Woe betide any IFA firm that challenges the organisation. The threat of being censored and put out of business by the FSA is so great that most IFAs dare not even criticise the organisation publicly. The FSA should welcome criticism and strive to improve the organisation so that we all ultimately benefit. I live in hope.
Tony Byrne is financial planning director at Wealth and Tax Management