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‘IFAs pay for bank failures’

Aifa has slammed the FSA for raising regulatory fees for all but the smallest IFA firms, warning that medium-size firms face overall increases of 90 per cent.

Director general Chris Cummings says firms with more than 26 approved persons will see regulatory fees, including Financial Services Compensation Scheme and Financial Ombudsman Service levies, rise by around 90 per cent and in some cases firms by as much as 170 per cent.

He says the FSA is endangering good firms and has repeated his call for a full review of FSA budgets by the National Audit Office and he highlights one of Lord Turner’s first interviews as FSA chairman last October when he said: “The IFA community has paid too much for too long”.

Cummings says: “Every firm in the UK is facing great difficulty and trying to find ways of cutting costs. At this time the FSA is doing the opposite by asking good firms for an increase in costs which will result in consumers being charged more for advice. We were hoping for regulatory restraint but instead have seen proposals that endanger the survival of good firms.”

He says IFAs are effectively paying for banking failures and he insists there should be an inflationary increase of no more than 3 per cent for intermediary firms. He says: “It is the banks and other organisations that should be forced to pay for their misadventures. The FSA should not expect our members to pay for the mistakes of others.”

Cummings also points out that appointed representatives will not benefit from the fee freeze for small firms.

He says: “Never in the history of financial services have we had a regulator that has cost us so much.”

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