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FSA funding requirement for IFAs to fall 8%

The FSA has announced that the annual funding requirement for IFAs will fall from £43.8m in 2009/10 to £40.2m in the next financial year.

It’s regulatory fees and levies for 2010/11, published today, show that the minimum fee for the smallest IFA firms will fall from £1,850 to £1,000.

The FSA says of the medium to large firms who pay the minimum fee plus a straight-line fee, 90 per cent will pay less in 2010/11, with 10 per cent facing an increase.

Mortgage brokers face a 32 per cent hike in their annual funding requirement, up from £10.9m in 2009/10 to £14.4m in 2010/11.

General insurers will see fees fall 14 per cent to £30.8m in the next financial year, compared to £35.9m in 2009/10.

The new minimum fee of £1,000 is an increase of 34 per cent for mortgage brokers and 122 per cent for GI firms.

The FSA’s overall funding will increase 9.9 per cent from £413.8m in 2009/10 to £454.7m in 2010/11.

The FSA says the increase is due to its work on delivering intensive and intrusive supervision, credible deterrence, the regulator’s  internal reform programme and EU policy, including Solvency II.

In 2009/10, the FSA hired 280 new staff as part of its supervisory enhancement programme.

The regulator says the full year costs of these staff will be represented for the first time in 2010/11 and equates to a 4 per cent rise in total FSA costs, even if no other investments were made.

The regulator says despite the increase in overall funding, 60 per cent of firms will actually pay less in fees.

FSA chief executive Hector Sants says: “We recognise that any increase in the industry’s costs is unwelcome at a time when margins are under pressure in some segments of the industry. However, the overall increases are necessary to deliver our new intensive supervisory approach.

“The new fee structure will ensure that the costs are fairly distributed and the increased investment is paid for by those firms who will be subject to the increased scrutiny.”

In the paper the FSA also explored changes it was looking to make to its fee structure for intermediaries for 2012/2013. In a previous paper the FSA floated the idea of making the size of the fee dependent on relevant income but a number of respondents raised concerns that they would be paying more, such as networks who would pass this rise on to members.

The regulator says it will make a decision on this in the autumn. It may also look to merge the fee paying blocks of IFAs, those who handle client money and corporate finance advisers, excluding investment managers.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. After all, I guess FSA bonuses need to be maintained … … and expensive hotels booked.

    What EXACTLY are they needing the extra brass for?? They’re not exactly doing the supervisory job properly in the first place (ie when did they EVER really batter the banks for their misgivings, level of complaints, sales tactics etc)

    Why not simply focus ON THE BANKS – the fines should take care of the extra funding reqd, methinks!! (tic)

  2. The concept of the policed paying for their own policing is an established fact for advisers, as is the “guilty until innocent” idea. It strikes me that maybe Parliament could take this idea and expand it to their current expenses problem, given that it has apparently cost £6.5 million to recover £1 million, leaving a shortfall of £5.5 million. There are currently 646 MPs so that’s only £8,513.93 each. And no appeal unless they can prove, in writing, that every pound claimed on expenses was legitimate because as we all know “…if it isn’t written down it didn’t happen”.

  3. Remember the £200,000,000 loan they got from Lloyds and HSBC to maintain their capital adequacy……………….now we know how its being paid!!!!!!

  4. Remember the devil is always in the detail and the FSA is the child of Cash Gordon.

  5. So the what the FSA gives with one hand it takes away with the other. IFAs get hit with the £70m FSCS shortfall for product providers going into administration becasue the FSA cannot seem to get to grips with effectively regulating them so the IFA picks up the tab, even if they have stayed well clear of structured products over the years. Why don’t they just admit that they want the quality IFAs to be forced out of business so there are less to regulate !

  6. Only 16 FSA personnel are allocated to supervise the entire Barclays empire.

    Can you see any balance?

  7. John Whipple – Adding Up..
    11:17 | 12 Feb 2010

    Now lets have a look at the basic funding increase of the FSA:-

    1999/200 AFR was £67 million

    Not a bad start but the empire was just starting to grow and in just seven years a 348% increase in AFR took the budget to £303 million a great achievement as this was the time the bubbles were being built up in the banking sectors. So they had plenty of cash to spend on regulation if they had wanted to – it was not a case of resource starvation.

    Then another huge jump in just two years to £437 million last year and now Oliver returns bowl in hand.

    More please sir ?

    Figures thanks to Simon Mansell and Citywire follow link:-

    http://www.citywire.co.uk/adviser/-/blogs/the-new-model-adviser-blog/content.aspx?ID=330018

  8. Well poor old hector needs his £650,000 salary, his £144,000 bonus and his £50,000 private pension allowance oh did I forget to mention his £239000 pay off when he leaves the fsa in the summer. When will someone audit these spendthrifts and convince them that we are small businesses that simply cannot afford them. We are forced, through necessity to cut our own costs every which way while at the same time finance an industry which pays one man over a million pounds in one year. Enough is enough what and when are we going to do about it?

  9. I would laugh if only it was funny!

  10. John Whipple – Adding Up..
    11:17 | 12 Feb 2010

    Now lets have a look at the basic funding increase of the FSA:-

    1999/200 AFR was £67 million

    Not a bad start but the empire was just starting to grow and in just seven years a 348% increase in AFR took the budget to £303 million a great achievement as this was the time the bubbles were being built up in the banking sectors. So they had plenty of cash to spend on regulation if they had wanted to – it was not a case of resource starvation.

    Then another huge jump in just two years to £437 million last year and now Oliver returns bowl in hand.

    More please sir ?

    Figures thanks to Simon Mansell and Citywire follow link:-

    http://www.citywire.co.uk/adviser/-/blogs/the-new-model-adviser-blog/content.aspx?ID=330018

  11. After all, I guess FSA bonuses need to be maintained … … and expensive hotels booked.

    What EXACTLY are they needing the extra brass for?? They’re not exactly doing the supervisory job properly in the first place (ie when did they EVER really batter the banks for their misgivings, level of complaints, sales tactics etc)

    Why not simply focus ON THE BANKS – the fines should take care of the extra funding reqd, methinks!! (tic)

  12. With some 40% of all registered individuals, it would be reasonable to see a reduction in the staffing levels at the FSA, along with the associated costs. Therefore, we expect to see a fair reduction in the current extortionate licence to trade fee.

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