The FSA says it is happy the Government intends to divert the proceeds from enforcement fines to the taxpayer and away from reducing industry fees.
Chancellor George Osborne has announced plans to ensure the proceeds from enforcement fines go to the public purse and not the financial services industry.
The rules would apply to fines levied since April, including the £59.5m fine handed down to Barclays for manipulating the Libor rate.
The £38.6m levied in 2012/13 on the fee block affecting most advisers would have been 21.7 per cent higher without fines from the previous year being redistributed.
At a press conference in London yesterday following the FSA’s annual public meeting, Money Marketing asked FSA chairman Adair Turner whether he is comfortable for the industry to pay more under the proposals.
Turner said: “It is clearly for the Government to set the framework for what happens to enforcement fines. It is true to say we had previously suggested to the Government there might be a possibility for alternative uses of fines, for instance we have suggested one might consider funding things like consumer education out of the fine revenue rather than returning it back to the industry. So we are perfectly happy the Government is now looking at those ideas.”
When Money Marketing asked for assurances that smaller firms would be ringfenced from increasing costs, Turner refused. However, he said fees for the largest banks and insurers had increased in recent years while fees for the smallest firms have been frozen for three years.
He said: “When we looked at it we realised that as a proportion of revenue, our fees for small firms were previously much larger as a percentage than our fees for the very largest firms, and we have significantly rebalanced that.”
Turner added that Financial Services Compensation Scheme levies are “precisely determined by certain metrics of revenue or assets, so those are already fully proportionate to the size of the firm.”
Cambourne Financial Planning director Mark Loydall says: “The cost of regulation keeps going up and this is just another hit IFAs do not need.”