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Tenet hits out at advisers’ 15% FCA costs hike

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Tenet has joined Apfa in hitting out at the 15 per cent fee hike faced by advisers, saying it is “clearly unsustainable” for fewer advisers to meet higher regulatory costs.

The Financial Conduct Authority published its regulated fees and levies paper earlier this week, which revealed advisers in the A13 fee block, which covers most financial advisers, are set to see their regulatory fees for 2013/14 go from £32.8m to £37.9m.

Tenet distribution and development director Helen Turner says: “The estimated 25 per cent reduction in adviser numbers in the 12 months leading up to RDR, does not take into account any additional individuals who may decide to leave the industry for other reasons during 2013.

“It is therefore neither feasible, fair or financially viable to disperse current external regulatory costs across fewer firms. Such a significant hike is clearly unsustainable and it is now the time to look at alternative regulatory funding mechanisms.”

The FCA has said it will launch a review later this year into the way its annual budget is allocated firms, which could see the current fee block model scrapped with fees allocated on an income or risk basis instead.

If fundamental changes are proposed the earliest these will be implemented in 2015/16, while if the existing fees allocation method is just tweaked the earliest implementation will be 2014/15.

Turner welcomed the regulator’s commitment to review the current fee model, but says: “Irrespective of any new formula the review delivers, it must recognise the urgent need to begin reducing costs and ensure they are proportionately shared across the whole financial community.”

Apfa has calculated that collectively financial advisers, advisers that handle client money, mortgage brokers and general insurance brokers will pick up 30 per cent of the FCA’s £432.1m budget for 2013/14. Firms will pay £391.5m of the total budget, following £40.6m in retained FSA fines. The trade body points out insurers are responsible for just 13 per cent of the FCA’s budget next year.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. What did you expect 12th April 2013 at 12:22 pm

    I laughed out loud when I read calls for the FCA to reduce fees in line with lower numbers of advisers.

    No chance, They were always going to slap the exta costs on the smaller number of us left.

    I really am so fed up with the gravy train that a-just keeps on rumblin’ at my expense.

    Not fit for purpose. Simple as that.

  2. “It is therefore neither feasible, fair or financially viable to disperse current external regulatory costs across fewer firms”
    Amen to that Helen.
    But the regulator, having “taken on board” the concerns, will go ahead regardless.
    They need more money in spite of the fact they have decimated adviser numbers.
    If employees were told their taxes were increasing at this rate, there would be riots in the street.
    We must pay up or ship out.
    Personally, I am about to ship out. I have had enough of working 12 or more hours a day to keep up with all their demands, only to be charged for complying with their every dictat. Stalin could not have made a better go of it.
    The government stands by and utters not a word whilst it’s citizens are blackmailed into paying to keep their employment.
    Not so smug now, are you? those of you who were hailing the RDR as the best thing since sliced bread.

  3. Bernie McKernan 15th April 2013 at 9:05 am

    Perhaps now is the time to consider making the regulatory costs more transparent by applying a “regulatory levy” to our client charges.

    This would appear to be in keeping with the “New model” and might have the added benefit of getting the client engaged in the discussion about increasing regulatory costs.

    So long as the issue regarding costs are contained to an “in house” problem within the financial services profession, any argument we put to either the regulator or the government will have less traction because the impact isn’t being pushed by consumer groups.

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