View more on these topics

Tenet calls for product tax to fund regulatory costs

Tenet has called on the Government to introduce a premium tax on all retail financial services products to part fund the FSA and Financial Services Compensation until a root and branch review of financial services regulation is carried out.

The network says a tax on products would be more transparent than regulatory costs being passed on to consumers through adviser charging and could help make the case for a full cost benefit analysis of regulatory fees and levies.

Tenet says the tax should be calculated as a percentage of the investment or product contribution and should be collected and allocated by the Government to cover the cost of regulation, the compensation scheme and consumer financial education initiatives.

Distribution and development director Keith Richards (pictured) says firms’ regulatory costs will continue increasing and the impact on small and large firms is becoming untenable in a shrinking industry.

He says: “The current funding strategy is clearly outdated and potentially broken, given the likelihood that costs and liabilities will continue to increase with fewer firms left to carry the burden.

“As an interim solution, we suggest consumers should pay a relative premium which is transparent and would apply to everyone, irrespective of distribution route.

“In a transparent and unbundled world, the consumer should understand the true cost of regulation and the price of the FSCS, which is a form of additional insurance to protect them that would otherwise continue to be fully factored into an adviser’s charging structure.”

In its consultation on FSCS funding, published last month, the FSA said a product levy would not be feasible because it would not take into account different risks of different products and transactions.

Carbon Financial managing director Gordon Wilson says: “There is definitely something needed to prevent the situation we we have now whereby good advisers are suffering from rapidly increasing costs and subsidising less prudent advisers.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. A common sense suggestion from Keith. The regulator which came up with the RDR surely cannot find coping with such a suggestion too complex.

  2. So the FSA dismissed a product tax because it does not take into account different risks of different products and transactions.

    It is however fair that IFA’s pay for Key Data, Arch Cru etc even though they didn’t advise on the product.

    Obviously the rules apply fairly to consumer and the industry then?

    These double standards have to stop how is it fair?

  3. Can anyone suggest reducing the size of the FSA/FCA? How about deregulating parts of minor functions, and focusing on larger areas and institutions. Product cost will make it pretty transparent. We are in a regulatory mess!!! When you have people able to afford mortagges,etc and not being able to apply? Surely its does not make sense?

  4. Good grief!

    If this is an example of the quick thinking of the great and the good (who do have the size and weight to catch the regulators attention) then no wonder we are always playing catch up to the FSA.

    Little runts like me have been saying the same thing for years – why has it taken this lot so long?

  5. I agree with the comments above, was a great idea, much fairer and so the FSA were bound to throw it out. I am still contantly disgusted by how they operate these double standards and act without thinking things through – like RDR. Am also mightly hacked off at paying for their re-branding to the FCA so they can hide from their off the scale damaging mistakes, yeah thanks for that FSA.

    Scary thing is though if the banks had suggested the tax and backed it perhaps the FSA might have thought it was a good idea, but us IFAs are clearly idiots and the root of all evil.

    Morning groan over!

  6. Kite flying is a boring pastime.

Leave a comment