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FSA reduces 2012/13 adviser fees and levies

The FSA has cut advisers’ regulatory fees and levies to £37.1m, down 6.5 per cent from £39.7m in 2011/12.

The FSA published a policy statement today confirming its regulatory fees and levies for 2012/13.

The figure is down 4 per cent from the £38.4m it proposed in February.

Advisers in the A12 fee block, which includes firms that hold or control client money, will pay £38.6m in 2012/13. This is down from an initial estimate of £40.2m and 19 per cent from £49.7m in 2011/12.

Firms in the A13 fee block will pay £1,191.47 per person in 2012/13, down from £1,290.54 last year.

Mortgage providers, advisers and arrangers – those in the A18 fee block – will be charged £14m for 2012/13, down from the initial estimate of £14.5m. Last year, these firms paid £15.1m.

While the total collected is smaller for mortgage firms, the fees will increase by 9.2 per cent, from £13.12 per £1,000 of income last year to £14.33 this year, because of a 10 per cent drop in income in this sector.

The fee for fund managers has also been revised down, from an initial estimate of £37.3m to £36.1m.

This is 28 per cent more than the £28.2m levied in 2011/12.

In total, the fees charged to all regulated firms has been set at £559.8m, down from £578.4m in the FSA’s initial estimate.

This has increased 11.9 per cent from £500.5m in 2011/12.

The FSA says the reduction in its fees has been achieved by internal cost controls which reduced potential IT spend and the return of contingency monies set aside for use only if the FSA needed to deploy extra resources in extreme macroeconomic and regulatory events.

The adviser contribution towards the Money Advice Service is set at £46.3m for 2012/13, 5.9 per cent more than the £43.7m allocation for 2011/12. Advisers in fee block A13 will see their contributions rise 6.9 per cent year-on-year from £4.3m to £4.6m in 2012/13.

Advisers in fee block A12 will see their MAS contribution rise from £2.8m to £3m, an increase of 7.1 per cent.

The total budget for the Financial Ombudsman Service will be set at £191.1m, up from £97.8m in 2011/12. The increase is driven primarily by the increase in complaints about payment protection insurance.

The body is funded by a combination of annual fees and case fee. All authorised firms pay a general levy, even if they have not had any cases referred to the FOS. The general fee for 2012/13 will be set at £19.1m.

The general levy represents 9 per cent of the FOS’s total budget for 2012/13, compared with 14 per cent in 2011/12. This means that the firms generating complaints will pay a greater proportion of the FOS’s costs than the firms which generate few or no complaints.

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. Smoke and mirrors designed to try and pacify us!! The FSA will just increase the interim levies to compensate !!

  2. By the time we pay all the interim levies we won’t even notice the reduction, as our fees, one way or the other, will go “through the roof”

  3. John Blackmore 29th May 2012 at 12:05 pm

    More to follow….

    Indeed. knowing the FSA they may well decide in 2018 that the figures for 2012/13 need adjusting ?

  4. They have obviously factored in the closure of MAS.

  5. Since when is a 12% increase on the previous year a reduction ?
    Is this the new RDR maths ?

  6. Dominic Thomas 29th May 2012 at 12:28 pm

    a case of swings and roundabouts?

  7. Justin Credible 29th May 2012 at 12:32 pm

    “This has increased 11.9 per cent from £500.5m in 2011/12.” – still a rather eye watering increase of nearly three times the most recent rate of inflation.

    Forget ‘wage demand’ and ‘supply push’, would any economics student out there care to write a paper on the effect of regulatory costs on UK inflation?

    Forget monetary policy, let’s get some ‘policy’ around sorting the red tape shrouded, bungling, frequently inept, unaccountable parasites and slim down the regulatory regimes in this country to what they should be doing. Now that would be real consumer protection.

  8. David Parkinson 29th May 2012 at 12:41 pm

    Trouble is that’s only the starting point. No doubt there will be additional levy’s along the way to top up the coffers!? Almost government type PR spin on this one!

  9. £46.3 million for a website (MAS) seems a little OTT to me.

  10. Graham Kennedy 29th May 2012 at 3:39 pm

    Surely if there are fewer mortgage brokers in the market to regulate the fee should not go up and the overall costs reduce by more than £0.5m??? I think it is time to earn a living cutting grass!

  11. Julian Stevens 29th May 2012 at 8:52 pm

    It’s been reported elsewhere that the principal reason for this minuscule reduction is all the huge fines that the FSA has dished out over the past year.

    So this is likely to be only the most temporary of respites, because the FSA has made no serious efforts to reduce its overall monumental operating budget. All it’s done, in reality, is increased its IT spend by a bit less than originally planned.

    No real cost-cutting measures have been implemented, such as doing away with that £20m bonus pot (gaily dished out regardless of how badly the FSA does its job), relocating 80% of its staff outside London to premises vastly less expensive than Canary Wharf (if the ICO can be based in Wilmslow, why not the FSA?), slashing its £1m stationery bill and £567,000 hospitality bill (both quite outrageously profigate), cutting out all those first class, all expenses paid overseas jollies for senior personnel (I’d still like to know why Adair Turner had to visit Korea or why the (now-ex) head of enforcement had to visit China) and so on.

    A properly constructed and independently enforced package of cost-cutting measures could probably eradicate about a third of the FSA’s colossal £560m annual operating budget. But, unless or until an independent body is created with the absolute authority to say the the FSA: This is wrong and you aren’t going to do it, nothing will change.

    And anyway, what we’ll be saving, and only for a short while, on direct FSA levies will be more than eclipsed by MAS and FSCS levies.

    There’s nothing in this announcement for the IFA community to welcome with open arms.

  12. @Steve Laird £46.3m is a lot to pay for any web site, but you should realise that it is designed to provide you with business. Try to use it as a layman and you will find that a lot of answers it provides can only be obtained through an registered adviser – and it says so.
    Since this is meant to be an alternative and “free” source of advice it begs the additional question of its purpose. There is no open financial market any longer. The competitive products are available only through advisers. Yes, you read that correctly. Despite all the adverse regulatory and media criticism of high commissions the best buys are ONLY available through advisers. And the MAS site consistently demonstrates this. So just how damaging to advice was commission?
    The FSA have through the MAS site proved that the exact opposite of their stated case.
    10 years ago the FSA ended polarisation in order to create a more competitive market. It became a more confused market. In January 2013 it will end the competitive market in order to provide an adviser monopoly. Surely you are happy to pay £46m for that privilege, even if you have had no say in the matter.
    I doubt that it will be less confusing for the consumer, but then the whole process has never been about the consumer. The sole intention is to create an industry that can be easily regulated. RDR is built on a load of fairy stories. So just be thankful that the FSA is handing you something back in the form of lots of enquiries – not necessarily profitable enquiries. The FSA are nationalising you inch by inch (great policy change for a pseudo-Tory Govnt).

  13. Mortgage Broker numbers have reduced from 32000 to 8000 in 3 years. I wonder what the numbers of IFA’s will be in 3 years.
    It will mean even less Firms paying the FSA fees leaving the remainder with higher fees as I can’t see the FSA staff numbers being scaled back because a loss of 24000 Mortage brokers has had no effect.

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