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IFAs face a double whammy over fees

IFAs could be hit by a double whammy of paying more than one fee under

proposals for a new FSA levy due to come in next year.

The regulator has issued a consultation paper which sets out its plans to

groupfee-payers together intoblocks depending on products and services.

IFAs can be a member of more than one block and would then be landed with

a bill for two blocks.

The regulator envisages 22 fee blocks under titles such as arranging deals

and fund management.

IFAs will also be charged according to riskiness and size of business,

with each block being given a different risk rating.

A firm&#39s riskiness will be determined by what they do. The regulator says

an IFA which sells Isas will not be judged the same as an adviser which

holds clients&#39 money.

The FSA says the size of the company will be the greatest influence on the

size of the fee. It is currently the only influence under the PIA.

The regulator will not yet say if fees will be increased next year but it

is widely considered that this will happen. The PIA has kept fees static

for a number of years.

The FSA says it is keen to encourage firms which are well managed by

giving then less “regulatory attention” rather than reducing fees, a move

which would mean them incurring lower compliance costs.

Responses are due in to the FSA by September.

Chief administrative officer Paul Boyle says: “The establishment of a

single statutory regulator will inevitably mean some changes to the basis

on which fees are calculated but our proposals are not intended to bring

about rad-ical change.”


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