View more on these topics

FSA switches fee basis from RIs to turnover

The FSA is aiming to implement a new fee structure for IFAs which could result in smaller firms with high turnover facing significantly higher annual regulatory fees.

In a document seen by Money Marketing, the FSA has revealed that it aims to change the tariff base for fee blocks from approved persons to an income-based measure for firms advising on investments.

The regulator has already created new income-based fee blocks for mortgage and general insurance inter-mediaries and has decided to drop its approved person approach for investment to deliver a “consistent method of charging across all these types of business”.

It aims to have this new structure in place by April 2005. Currently, firms with a single RI pay £1,525 a year while firms with more than 2,500 advisers pay £566 per adviser.

Sofa managing director Brian Lawless says he is worried that the FSA is taking this action as a way of increasing fees, questioning whether the move will make any difference to the administration of fees.

Lawless says he understands the rationale behind having a common fee structure but cannot see why the FSA has already decided to move straight to an across-the-board income-based model which he says would inevitably lead to higher fees for small, profitable firms.

London IFA Advisory & Brokerage Services chief executive Gareth Marr says: “In terms of risk, a key determiner is the advice each RI gives their clients, so the amount of RIs you have is a good way to determine risk. It is people who make mistakes, not numbers.”

Lawless says: “Changing the fees in this way will look like a back-door ruse for raising fees.”

FSA spokesman Robin Gordon-Walker says: “We are still looking at the pros and cons of moving to the income-based model. Increases would depend on how income is assessed and we will try not to have too much distortion.”


Pensions Bill widely predicted for December

Liberal Democrat spokesman for work and pensions Steve Webb predicts that the Government will deliver a Pensions Bill by the end of the year, with detailed debates before Parliament breaks up for Christmas. Webb expects the Pensions Bill to contain details of the proposed pension protection fund and changes to the priority order for wind-up. […]

Woolwich maximises returns

Woolwich Plan Managers has established the premium protected growth plan, a guaranteed equity bond that provides a minimum return of investors&#39 original capital after five years and six months. The bond is linked to the FTSE 100 index and investors will also receive 100 per cent of any increase in the index at maturity.To calculate […]

JLT concerned over increased minimum fund levels for annuities

Legal & General has raised the minimum fund value for annuity purchase to £5,000 from £1,000 in a move that leaves Standard Life the only provider accepting applications on the open market for values below £5,000 with a minimum of £2,000. Jardine Lloyd Thompson says 6 per cent of the annuities it placed last year […]

Corporate focus for cash bond

Prudential International Assurance is offering an offshore cash portfolio bond. The Prudence portfolio bond capital-redemption option, which has no entry or exit fees, is a single-premium unit-linked contract with no life assured and a fixed term of 99 years. Investment relationship manager Richard Leeson says it is aimed at low-risk high-net-worth clients aged 50-plus, trustees […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment