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FSCS reform sees fees plummet for advisers

Changes to the Financial Services Compensation Scheme mean that advisers will face significantly lower combined regu-latory costs in 2008/09 compared with previous years, according to Aifa.

Deputy director general Fay Goddard says despite increases in FSA fees, the remod-elling of the funding scheme for the Financial Services Compensation Scheme has helped to bring down the regulatory cost for advisers.

She says: “Aifa has worked tirelessly to secure a fairer distribution of regulatory costs and the new FSCS funding arrangements have helped deliver this.

“Last year, firms in fee block A13, where most IFAs fall, paid around 1,290 per adviser to meet FSCS costs. Under the new structure, according to theFSA website, the levy for 2008/09 for a sole trader just under-taking life and pension business could fall to 218. The FSCS bill for a firm of eight advisers conducting just life and pensions drops from 10,180 toan estimated 1,650.”

Goddard says Financial Ombudsman Service fees have increased slightly from lastyear but case volumes are exp-ected to fall.

She says: “It is a mixed picture for advisers with regard to the FOS fees. The good news is that the number of cases is expected to continue to fallto an estimated 84,000 which would be10,000 fewer than last year’s forecast but this does affect the case fee.

“Fewer cases mean less money is raised through case fees, which pushes up thegeneral levy. To keep a proportionate balance between case fees and levy, the FOS is proposing to increase the case fee from 400 to 450 but the good news is that firms will receive three free cases rather than two.”

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