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FSA to lower minimum fee for IFAs by 45%

The FSA has today proposed changes to the structure of fees for regulated firms which will lower minimum annual fees for IFAs by more than 45 per cent.

The regulator plans to reduce the minimum fee for advisers from £1,850 to approximately £1,000, which is a cut of 45.9 per cent.

An FSA spokeswoman says the exact minimum fee will be calculated when the regulator consults in February on the 2010/11 levies, but based on this years’ figures would be £1,000.

It is also proposing cuts to the variable fee, which it estimates will result in lower costs for 56 per cent of firms and increased fees for only 1 per cent.  

Variable fee calculations are currently based on the size of the firm in terms of the number of approved persons, but the FSA will consult on whether this should be changed to income.

The FSA is also consulting on easing costs for firms offering more than one area of business. Firms operating across two fee blocks who now pay 100 per cent of the fee for the main block and 50 per cent for the second, may also only have to pay for the main area of business.

The FSA says it will publish a fees calculator by the end of November which will enable firms to assess what these proposals mean for them.

FSA’s chief operating officer Mark Norris says: “We are committed to delivering fair and transparent fees to all authorised firms. This is particularly important given that we are funded entirely by the firms we regulate, so we need to ensure firms can clearly see how we calculate their contribution to the running costs of the FSA.”

The FSA is inviting responses to the proposals in its consultation paper by January 11, 2010.

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. I declare that the sun will not rise on Wednesday. Please do not ask me to specify which Wednesday.

  2. About time too!! It is about time our regulators did something to help small IFA firms out during these times. Maybe they should relax on a few
    more issues regarding information required for reporting etc..??

  3. The advert for Invesco Perpetual with sound is extremely irritating and I would not turn off if it were possible. If that type of advert continues I will stop opening emails from Money Management

  4. It is about time that the regulator did something to stimulate the IFA market. As we live in a time when billions are being thrown at our banks with little or no support to the IFA market. The government continues to say that it needs more IFA giving quality financial advice but does little to support industry. So the reduction of fees is welcome but surely we can also look at some of the other more contentious areas like RDR and the sheer weight of reports that IFA are required to carry out to continue in business. It’s no wonder that the older IFA is getting out of the market altogether and that younger people are not coming into the industry. It’s interesting that the billions been injected into our banks is also being used to help promote their products and services in giving them an unfair advantage. What about subsidies to IFA’s as we are not the ones that generate huge levels of complaints.

  5. And what about the networks, which do 80% (if not more) of the FSA’s hands-on, day to day regulation of its member firms?

  6. Can you stop having these annoying adverts. L & G and Invesco Perpetual interferfering with my ability to read the editorial on the screen. They are getting up my nose.

  7. ‘What have the Roman’s ever done for us’?!

    Funny, if the fees had gone up by forty odd percent there would have been pages and pages of impassioned prose… but only one comment so far?!

  8. At a time when millions of pounds have been pumped into the banking sector to keep them afloat this concession is welcome news. If the FSA can now have a looks at the have proposed changes to capital adequacy, the degree level examinations and the pending termination of half of the IFA sector post 2012 all will be forgiven!

  9. Don’t get too excited don’t forget that the loan from the Treasury to the FSCS for the banking collapse is on interest only at present and when it starts being repaid, this might overflow in to the advisory levy, hence any savings on FSA fees could end up going in increased FSCS fees!

  10. Is this a hollow bluff? With the Tories promise to scrap the FSA, is it too little too late? Many IFAs would have gone to the wall by then to benefit anyway.
    Cutting out most of the petty requirements may save us a lot more.

    My buddy from Links thinks there should be a refund, like the bank charges scenario. Why not?

    Any feeling of relief may be artificial, as the fees will still be astronomical compared to other professions, bearing in mind IFAs have an enviable track record in terms of complaints, compared to say solicitors.

  11. I’m glad the FSA have now realised the transparency they preach would show the unfair distribution of costs they charge and that it needs to be addressed before they kill their golden IFA geese!

  12. F-Pack Wooden Spoon Team 10th November 2009 at 8:27 pm

    Come on boys and girls, lets not get sucked into the F-Pack bullsh*t. They are only trying to pretend to be friendly so we let our guard down.

    Keep your bayonets and rifles clearly pointed at them until they put up the white flag and hand in their P45s and start sweeping our dirty streets.

  13. Good to see the FSA apparently seeing things for what they really are out here…(except for the banks of course )
    Strange this, because not so long ago they were telling us that they needed a massive increase in their budget….until AIFA got to grips with the issue and stood up for us all…..

    There wouldn’t be an election in the forseeable future would there?

    Still, a very welcome ‘coming-to-one’s-senses’, all the same….

  14. I’ll believe it when it happens.

    I agree with another observer that whilst FSA fees may go down, the FSCS levy may go up to compensate. Or, perhaps, a completely new fee will be introduced.

    Just look at government – they claim to bring down the income tax rate (to 20%) but then allow personal allowances to stagnate and increase NI rates. Net outcome – tax take goes up.

    Smoke and mirrors come to mind !

  15. Don’t get so excited about POSSIBLY being let off a few pounds. Lets all step back a little.

    This is the same FSA that f….d up big time, while drawing salaries and benefits that they presumably set themselves. They then just passed portions of that bill to us for payment. Much like the politico’s in Westminster.

    Whether or not it was intended this way the fact is we have a situation where the FSA is effectively an extension of the Treasury which, staffed by good Civil Servants, watched over by their ‘political advisers’, works on the basis that they will micro manage and be as intrusive as they like, on the arrogant but unspoken presumption that they ‘know best’.

    I believe this ‘Institutional Arrogance’ is a direct result of the ten years Gordon Brown spent as Chancellor with his penchant for minute detail and his refusal to accept advice, or indeed any opinions other than his own. This ‘IA’ undoubtedly rubbed off on Treasury personnel and through them to the FSA.

    (As an aside, there is a parallel intrusive attitude in the rest of Whitehall that says Government must get ‘involved’ and legislate, legislate, legislate. This stems from Tony Blair’s ‘Conviction Politics’, all be it with those ‘Convictions’ changing on a weekly basis with each focus group, continually giving rise to new initiatives, new policies and new legislation. The difference however is that he at least tried to have us believe that he was responding to what ‘the public’ wanted. Gordon Brown has no truck with such attitudes because his ‘Conviction’ is that he alone always knows best, about EVERYTHING. Therefore he NEVER makes mistakes, ergo nothing ever to apologise for!)

    I believe all we are seeing in this ‘proposal’, because this is ALL it currently is, is a bit of political manoeuvring with the FSA trying to draw the sting from the smaller regulated firms complaints. As a number have already commented these, possibly reduced, charges may well be overshadowed by a much increased levy from the FSCS. By giving with the FSA hand and taking with the FSCS hand the FSA can then suggest that it is listening and trying to help the small advisory firms. Just that unfortunately there is this big bill to pay for the compensation levy. Sorry but we tried!
    If we assume there are perhaps as many as 15000 advisers who may possibly benefit by £1k this only equates to £15m in total. Not a lot in the FSA’s overall budget and one that can be plugged with a few fines. This therefore is probably seen by the FSA as an inexpensive way of getting a bit of good publicity. Pretty cheap trick if you ask me so don’t let them get away with it by being so ready to praise them. Oh and pray for a one handed FSA, looking after only ‘consumer interests’ after the election, rather than this multi handed monster.

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