New IFA firms are facing a sharp rise in regulatory costs to set up in
The cost of registering with the PIA has jumped by nearly 17 per cent this
year to £1,750 from £1,500.
But the regulator claims this is still much less than prospective members
of other self-regulating organisations have to pay.
The fee, which also applies to product providers joining the PIA, is a
one-off charge per firm.
There is also a £30 fee for each individual, which has not changed this year.
The FSA says the increased registration fee was introduced so that
existing firms would not have to subsidise the processing costs for new
The £250 rise in fees, which the PIA attributes to increased costs arising
from the volume of new entrants to the IFA market, is the first increase
since the PIA was set up six years ago.
The PIA expects that processing applications will cost it £700,000 this
year compared with a total of £600,000 in 1998.
Around 400 firms apply for authorisation with the PIA each year and most
of the applicants are IFAs.
FSA spokeswoman Sarah Modlock says: “It could be argued that a small rise
each year may have been easier than one big rise after six years but the
fact is that we want to avoid the existing firms having to fund any
IFA Pretty Technical Partnership partner Jo Smith says: “I do not think
that the fee will pose a barrier to new entrants. If you want to be an IFA,
you need authorisation and you do not have much choice.”