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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:


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There are 20 comments at the moment, we would love to hear your opinion too.

  1. Where’s Cameron, we need protecting from this arrogance!

  2. I will be standing on Putney High Street rattling a collection tin. All donations gratefully received.

  3. Mr Cameron is far to busy to deal with this matter at this time, he has more important issues such as dealing with the defict from the reduced level of taxation coming into HMRC because of the reduction in the work force due to massive redundances. When the industry has been royally screwed up, then he will address the matter and seek to introduce a new law for Financial Services which in essence will finish the job started by the FSA.

    Someone prove me wrong!

  4. At least the banker’s do somethig for a bonus this lot invent nonsense and charge us for the privilege. MAS £87m for what exactly? Its useless and will fail to help anyone ! FSA costs up 16%, I thought they were closing. What the hell is going on?

  5. Perhaps someone with more inside knowledge can clarify a small query on the facts and figures mentioned. The budget is increasing by 15.6%, approximately 10% higher than inflation.
    Hector Sants states “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.”
    So what is going to happen to that 10% extra that apparently isn’t needed? I wouldn’t be required to hire someone to talk Hector into reluctantly take a promotion to the Bank of England would it?

  6. I really shouldn’t read these articles, they just get me worked up!

    I don’t think any of us mind paying fees / levies / taxes if we feel they will be spent well and help protect consumers in a sensible manner, but I just don’t have any confidence the FSA or FCA will achieve this.

    I would suggest that Mr Sants and the FSA budget controller could do with meeting an IFA to discuss prudent spending within a budget and prioritising needs.

    I really do fail to see how the FSA has managed to spend £500m and where it has added value. Increased costs to the industry in many cases lead to added costs for the end consumer.

    The FSA should bear in mind that increasing costs could put financial advice out of the reach of many which doesn’t benefit anyone.

  7. So the MAS DOES provide advice. Make your minds up chaps!

  8. Cutbacks almost everywhere!

    Redundencies left, right and centre!

    Householders throughout the land working out what they can do without!

    And these greedy, arrogant, incompetent people think a 16% increase is acceptable?

    Oh Dear! Oh Dear!

  9. Have you not learned anything over the last 3 year 2nd February 2012 at 2:31 pm

    You would get less stick if you paid that money to the bankers as a bonus.

    Next you will be telling us that you were pushed to take the money.

  10. Scene; sants and hobman in the mens’ room.

    sants, seeing hobman says;’ you’ve just given me a great idea, hobbo regarding the the annual budget’
    ‘Oh yeah?’ says hobman
    ‘yeah, I think I’ll it away per normal’
    ‘sounds good to me’, says knobman.

    Says sants, ‘well now we’ve got the budget sorted, how’s about popping down ‘The Ivy’ for a slap up lunch… on expenses…. after all, we’re worth it.

  11. Sounds good doesn’t it.
    Fees for advisers down from £39.7m to £38.4m.
    However what they fail to mention is that the number of advisers are down substantially & come 2013 will be down further still.
    So the cost per adviser is increasing.
    You would have though that it would cost less to regulate fewer people not more.

  12. So now we know the MAS DOES give advice. Well worth the 87 million as they are all QC Level 4 of course. If it wasnt so tragic it would be laughable!!!

  13. Aha! ‘twin peaks model’ eh? That should come in handy when it all goes t**s up.

  14. The “Big 4” must be squeezing them for more money.

  15. Sounds like a lot but lets think about it, £500m odd is what large banks make in a matter of weeks, the FSA regulates around 25,000 or more firms and protects the whole country’s consumers on this shoestring budget. I don’t think its much at all for the remit, lets just hope it is used sensibly.

  16. Protects the whole country’s consumers?
    When was that bonus boy?

  17. “The year to April 2013 is expected to be a challenging one” for all authorised firms as well, Mr Sants.

    Have you never given even the slightest consideration to the firms that you drain of their lifeblood?

    Are you so removed from the realities of life, in your gin palace in Oxfordshire, that you don’t actually realise the impact of the many woeful decisions that you and your team of theorists arrive at?

  18. I just about agree with every comment here which must be a first! The financial services are being bashed from all sides and the FSA do make me laugh! 16% increase and lets pay the MAS to give free advice to everyone; bit like the health service really. They might finally stop when all the advisers are gone and in my eyes, I can see it happening sooner rather than later

  19. @ Nick

    If you read the actual paper, you’ll see (on page 43 of the PDF) that not only have the totall costs for fee block A12 and A13 both gone down, the number of relevant people in each fee block has gone up, meaning everyone will pay a smaller share of a smaller sum. Sorry to burst your ranty Daily mail bubble…

  20. @Adam
    surely any saving will be wiped out by the MAS increase together with the interim levies.

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