I read the front-page article, Outcry as FSA tells IFA its fees are too high (MM, May 13) with some disbelief. Obviously, I am not aware of the full facts, and I hope there are some extenuating circumstances or perhaps some important information that was not disclosed to your paper. If not, this stance by the FSA appears to be inconsistent with its thoughts on this matter to date.
The debate about excessive charging has largely centred on commission-based advisers, and this is perhaps the first time the accusation has been directed at a fee-based adviser. I agree that clients need to be protected from unreasonable fees. However, what surprised me most, as I am sure it did many of your readers, is the amount that the FSA is reported to believe excessive.
Ron Sandler's review in July 2002 quoted research from IIF Research, indicating that the range of fees charged by IFAs varied between £120 per hour and £250 per hour.
The more recent FSA consultation paper on the subject of the menu points out “there are also likely to be significant, regional disparities for fee levels. For example, and in providing similar services, an IFA in London might reasonably be able to command a higher hourly rate than one in the North of England”. Given that this IFA is based in central London, the £150 per hour fee does not appear to be unreasonable.
Perhaps we in the industry are missing the point. All focus appears to be on the cost. Arguably, the emphasis should shift to the value that is placed on advice.
The industry did itself a major disservice in the 1980s and 1990s by promoting free advice. Of course, it was not really free and the impact was that if it did not cost anything, it was not worth anything.
The time and the opportunity have come to draw a line under this perception.
If the industry cannot value advice itself, how can we ever expect the public to?