The FSA has told a central London-based IFA that its £150 an hour fees are too expensive and it must lower them.
The move has left IFAs aghast at what they see as blatant market intervention and has sparked fears that the regulator may be determined to push down IFAs' tariffs despite clients' willingness to pay what is perceived to be the market rate.
Money Marketing understands that, following a recent FSA supervisory visit, a fee-based advice company operating in central London was told its hourly fees are too high.
In defending itself, the regulator cited a conduct of business section in the FSA handbook stating a firm must ensure its charges to a private customer made in connection with the conduct of designated investment business are not excessive.
The firm in question did not want to identify itself as it is appealing against the FSA's action.
Fee-based IFAs in London say that far from being excessive, £150 is the starting point for their rates, ranging up to an initial fee of £10,000 for complex cases.
Pensions & Investment principal Phil Moore says: “It would appear the FSA wants to move towards operating a cartel in telling us what we can charge. It is extremely interventionist and I am totally against it.”
Institute of Financial Planning chief executive Nick Cann says: “A move to cap charges for fee-based advisers would completely disenfranchise the top and bottom ends of the market.”
FSA spokesman Robin Gordon Walker says: “It is no secret that this rule exists, requiring companies to ensure that charges are not excessive. It is in the handbook and obviously, by definition, it is something that companies should follow.”