FSA fees are likely to increase in the short term to get rid of rogue advisers in the market.
At a debate on the retail distribution review at last week’s Personal Finance Society conference in Birmingham, director of small firms Stephen Bland said the FSA is increasing small firm supervision which will lead to a shake-out as the industry moves towards higher standards.
He says fees are likely to rise to cover the cost of the extra work but advisers, especially small firms, will benefit in the long term through the RDR changes which should lead to lower costs on the Financial Ombudsman Service and Financial Services Compensation Scheme.
Addressing fears that the RDR will squeeze out small firms, Bland said he expects a healthy and thriving community of small firms to continue as a result of the changes.
Bland said: “We want to get rid of the rogues in the market and provide help for the vast majority of firms wanting to do the right thing. There will be a bit of a shake-out as we move towards higher standards in the IFA industry. There will be a short-term rise in direct FSA costs but overall the package should go down and I have every confidence there will be a healthy community.”
Bland said the FSA has had around 250 official responses to the RDR but is also considering the feedback it has had from talking to small firms across the country.