Some advice firms have seen their regulatory bills more than double as the cost of Financial Services Compensation Scheme levies is brought to bear.
Firms have started receiving their regulatory bills for the next financial year over the last week.
Compliance firm Threesixty estimates that 80 per cent of the costs are generated by the FSCS, with total levies for life and pension advisers going from £57m to £100m.
Managing director Phil Young says: “All of these firms show a reasonable increase and the lowest we have seen in detail was an increase from £50,000 to £76,000.
“These things have been getting out of control.”
Informed Choice managing director Martin Bamford has yet to receive their full regulatory bill, but adds advisers are struggling to understand paying more for both better regulation and more firms in default.
He says: “We don’t seem to be getting anything in return for it.
“More effective regulation should mean fewer failures, and fewer fines, but we are spending more on regulation and more on compensation so something is going wrong somewhere.”
Rowley Turton IFA Scott Gallacher agrees. He says: “It’s not going up by small amounts and I don’t see how you can have a principle of ever rising regulatory costs.”
Gallacher adds the costs have led some customers to question the value of the advice service, because they are unaware of the proportion of fees going to the FCA.
He says:“Firms should be looking at providing bills to customers that break down the regulator costs. Maybe that would lead to regulatory costs being more appropriate.”
Alpha Investments and Financial Planning director Alan Solomons expects his costs to rise by double or more.
He says: “I thought we would be over the worst by now. I didn’t expect it to be going down, but I expected it to be going about the same as last year.
“What the FCA should be doing it looking at products before they’re launched, then we wouldn’t have the cost of all these failures to bear as well.”
2014/15 £50, 000
2014/15 £37, 000
2015/16 £72, 000
Source: Sample from Threesixty