Almost 90 per cent of IFAs have not paid their FSA fees and are one week away from fines and interest for late payment.
FSA managing director David Kenmir says 3,627 invoices for a combination of Financial Services Compensation Scheme, FOS and FSA fees have been sent out since July but only 388 IFAs have paid. The deadline for payment is the end of August.
IFAs who do not pay in time face a one-off admin charge of £250 coupled with interest payments of 5 per cent above base rate – giving a current rate of 9.75 per cent – or having their licence taken away.
Last week, MM revealed that part of the reason for massive increases in FSCS levies is a reduction in the subsidy paid by product prov-iders from 85 per cent to just 15 per cent.
Kenmir says he will be speaking to providers about their decision to cap their contribution to the levy and spelling out how they will be hit if IFAs are forced out of the market for failing to meet FSA fee requirements.
Reports have suggested that advisers facing difficul-ties with payment over inc-reases in their fees could pay in instalments but Harris Investment Management principal Alan Harris, whose levy has increased by 2,588 per cent, says he has been told by the FSA that this is not an option.
Kenmir says there are no current proposals to allow IFAs to pay by instalments but a definitive way forward will be found once the number of IFAs unable or unwilling to pay their fees is found.
Harris says: “According to the FSA, if we do not pay all the money owed in time, we will face fines and interest charges. They are being tot-ally unsympathetic.”
Aifa director of policy Fay Goddard says: “We will continue liaising with the FSA to see if they will be more pragmatic.”
Kenmir says: “I suspect next year's levy will be larger than this as endowments will be ongoing and failed precipice bond firms will hit.
“I am more than happy to speak to providers about the impact their cap on the levy will have. Providers receive 50 per cent of their distribution through IFAs and they need to understand the impact it could have if IFAs can't meet our requirements.”