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FSA fees to fall for advisers

Most advisers will see their FSA fees fall by 3 per cent in 2012/13 despite an overall 16 per cent increase in FSA funding.
The regulator published its consultation paper on fees and levies for 2012/13 last week.

It proposes increasing its annual costs from £500.5m this year to £578.4m for 2012/13, following a 10 per cent increase last year.

The regulator’s total funding requirement includes the cost of the regulatory restructure from the FSA to the Prudential Regulation Authority and the Financial Conduct Authority, which has gone up by 198 per cent, from £10.9m in 2011/12 to £32.5m.

However, advisers in the A13 fee block, who do not hold client money, will see their annual FSA fees fall by 3 per cent from £39.7m to £38.4m.

Advisers in the A12 fee block, who do hold client money, will see a more dramatic fall in their fees of 19 per cent, from £49.7m to £40.2m. In 2012/13, 19,600 firms will only pay the minimum fee, frozen at £1,000, a slight increase on the previous year.

The FSA says the drop in the A12 fee block reflects a predicted reduction in enforcement activity in the next year, following a significant increase in 2011/12.

The drop in regulatory fees for advisers may also be more significant than the headline figures suggest.

The number of advisers in the A13 fee block has risen from 7,022 to 7,129 while the number of advisers in the A12 fee block has increased from 1,807 to 1,889. This suggests the fees will fall further as there are more advisers to contribute to each fee blocks’ funding costs.

Essential IFA managing director Peter Herd says: “Although adviser fees are down, they are still disproportionate to the risk that adviser firms pose. The regulator seems to concentrate on the minute details rather than tackling the bigger picture.”

Yellowtail Financial Planning managing director Dennis Hall says: “Overall FSA costs have gone up by 16 per cent and ultimately it is the consumer that pays. Every other public body is having to rein in what they spend and yet the FSA seems to be out of control.”

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