The regulator is consulting with the industry after setting out its 2009 business plan. The FSA confirmed to Money Marketing that plans to change the fee structure to one based on income are under consideration.
Last week, it spoke to trade bodies and industry figures about possible changes but has not begun to implement any formal consultation.
Institute of Financial Planning chief executive Nick Cann says that the plan may have to be reconsidered in light of changes that firms are making in preparation for the retail distribution review.
He says: “The FSA has to make sure any new structure aligns with plans for the RDR. Fee-based firms investing in new systems and staff in preparation for the RDR may be unintentionally penalised.”
Sifa compliance director Ian Cockerill says the structure would adversely affect professional IFA firms which provide holistic advice where the fees may relate to tax and other unregulated activities.
He says: “How can a holistic IFA define what income came from regulated and unregulated activities? If they charge more for taxation advice and less for regulated activities, that is advantageous to the proposed structure. On the other hand, they might just charge a single fee and will not know how to split any income made.”
Calculis director Alex Pegley says fees should be based on risk, not income: “We are very rigorous in our attitude to risk so should be rewarded for that. Regulator fee structure should be similar to professional indemnity insurance – if you have had complaints against you, you should be charged more to operate.”