FSA annual costs up by 16%, MAS budget doubles to £87m

The FSA has proposed to hike its annual costs by 15.6 per cent from £500.5m for 2011/12 to £578.4m for 2012/13.

This follows a 10 per cent increase last year.

The FSA has published its consultation paper on fees and levies for 2012/13 today.

It shows that despite the overall increase, fees for advisers not holding client money have fallen by 3 per cent from a total of £39.7m to £38.4m.

Fees for advisers holding client money have dropped 19 per cent from a total of £49.7m to £40.2m.

However fees for life insurers have gone up 37 per cent from £44.5m to £61.1m. Fees for fund managers have also jumped 32 per cent from £28.2m to £37.3m.

The paper also reveals the total Money Advice Service budget for 2012/13 has doubled from £43.7m for 2011/12 to £86.8m in 2012/13.

The FSA says this reflects the decision by the Government to move debt advice to the MAS.

Out of the total £86.8m budget £46.3m will deliver ’money advice’ while £40.5m will be allocated to debt advice. Advisers will continue to pay for the MAS’ financial capability remit as they did before, and the debt advice element of the service will be funded by banks, building societies and lenders.

FSA chief executive Hector Sants says: “The year to April 2013 is expected to be a challenging one for the FSA.  We will be moving to a twin peaks model internally ahead of the split into the Prudential Regulation Authority and the Financial Conduct Authority, whilst at the same time continuing to focus on our supervisory role in a very difficult economic environment.  We are mindful of any increase in costs to industry and have continued to maintain headcount and keep core operating costs in line with inflation.”

MAS chief executive Tony Hobman says: “The MAS was set up to address one of the nation’s endemic problems: poor understanding and management of personal finances. It is a unique service that provides free, practical advice to people who need to get to grips with their money.

“We have come a long way, but there is a lot more to do. We are highly ambitious for the service in 2012/13 and beyond, to achieve our vision to enhance people’s lives because they take control of their money as a matter of course”.

The FSA published a consultation paper in October which proposed an overhaul to the way adviser firms’ fees are calculated from the number of approved persons to a firm’s income. If implemented, this will come into effect for 2013/14.

The figures published today indicate the level of regulatory fees and levies firms are likely to pay for the next year. The final figures will be published later in the year.

Proposed regulatory fees for A-D fee blocks for 2012/13: