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TSC chair Tyrie: ‘strong case’ for FCA to repay £118m overcharged in adviser fees

Treasury select committee chair Andrew Tyrie says there is a “strong case” for the FCA to compensate advisers after they were overcharged by £118m in regulatory fees.

Speaking at the Treasury select committee today, FCA chief executive Martin Wheatley refused to accept advisers had been overcharged.

When quizzed on the issue, FCA chairman John Griffith-Jones told MPs he did not know anything about it.

Last October the FCA admitted an “anomaly” in the way the A13 block – which relates to advisers who do not hold client money – interacts with A12, a separate fee block for advisers, dealers and brokers who hold client money.

It means A13 advisers have been paying a higher fee per £1,000 of income than firms which hold client money despite requiring less regulatory scrutiny.

Last November, Money Marketing calculated that the A13 fee block had been over-charged by £118m over the past five years.  

Tyrie highlighted the Money Marketing research when questioning Wheatley this morning on why he was not compensating advisers.

Tyrie said: “On the basis of the information put to me there is a strong case for compensation in returning this money, a strong case.

“This money clearly should not have been charged once you look into the detail of it. These firms have clearly been put at a disadvantage. Their customers have been charged more than they should and their shareholders have suffered too. I am surprised you are so firm this is not overcharging.”

Tyrie said he was “very concerned” Griffith-Jones did not know about the overcharging and called on him to review Wheatley’s decision and write to him with his conclusions.

Wheatley said: “I think the term overcharged is wrong. We make decisions each year as to what we charge each fee block and we adjust them each year depending where our efforts and resources are used.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. They will have to cut back on the office flowers now! 🙂

  2. I may be jumping the gun here but I don’t think Mr Tyrie or the TSC are going to be fobbed of ( el a Sants)so easily this time around ?

    How the hell can Griffiths-Jones say he knows nothing about fee block A13 being over charged, miss calculated ?

    Um let me think; KPMG, Co-op, HBOS etc etc etc he doesn’t know a lot about anything does he ?

  3. The matter offers as many worrying concerns about the capability of the chairman as it does the ethicality of taking/stealing/over-charging (choose your word) advisers.

    Yes, it will involve additional work and effort – a bit like the regular reviews and checks & balances that advisers have to contend with. Nonetheless we have a situation where the FCA can elect to do the right thing and place disadvantaged advisers back where they would have been (with 8% interest, perhaps) or ignore the clamour and do what the FSA would have, which is shut up, go away, we can do what we like and nobody can stop us.

    Martin, the option you choose will set the tone for the future, so choose carefully.

  4. Yes many will be in high dudgeon – understandably.
    But let’s use a little logic. £118 million –over- levied in the past. The money is spent, gone, verschwinden.

    So where will it come from if they do agree to repay? There is only one place us – so they will give with one hand and take with the other. As I suggested in a previous post some time ago, perhaps they could reduce the fees we pay (say a little each year until the total is made up) the shortfall can the come from the other fee groups who should have borne it in the first place. This way no one’s cash flow is too badly hammered.

  5. Good for Andrew Tyrie! The TSC under his chairmanship is doing a good job of holding the FCA to account. We should all be concerned for the future when the next chairman is not so forceful or influential. There should be a stronger statutory method of making the FCA accountable.

    Was the subject of the cost of away-days and flowers raised?

  6. I hear what you say Harry, and to a degree agree with you !

    But just a thought ? RDR has cost “3 billion”, flowers 200k, nights away 15k, 75k on outside think tanks, the art that hangs on the wall, the list is endless, and how much is the cost for the space of the waste paper baskets (from one of your posts a while ago) at their swanky offices both at canary wharf and Edinburgh ?
    The shear waste of money is eye watering !!
    I forget the figure but, how many FCA staff on over a 100 grand a year ? just say its a lot !!!

    I do disagree that fees should be lowered for the future, they should be made to pay and pay it back now and they should be made to budget this out of the bonuses, pay and just being made to budget responsibly.

  7. @DH

    Of course you are right. They are very cavalier with money. But then are all Government departments of similar ilk. Look at the BBC & the NHS; they spray money around with gay abandon. They don’t MAKE money; they rely on tax and public impost. The culture is all wrong. It’s not out of their pocket. But will it change – I doubt it.

    The bottom line is that it’s just a tax for doing business. I feel my tax is wasted, I can try (and generally do) minimise it, but I still get irritated when I see what they waste it on. Foreign Aid for starters. (Actually it’s bribery – but you’re not supposed to say that).

    As for Mr John Griffith-Jones, well his disconnect with the job is hardly surprising. Look at the fines and litigation that took place at KPMG during his stewardship. One wonders how come they didn’t appoint Paul Flowers into the role.

  8. Harry says “But let’s use a little logic. £118 million –over- levied in the past. The money is spent, gone, verschwinden.

    So where will it come from if they do agree to repay? There is only one place us”

    Harry, I beg to differ – yes, the total monies raised from all sources has been spent by the FSA/FCA.

    If we agree that OUR fee block has been overcharged ? – then it is reasonable to assume that other fee block(s) have been undercharged . They have profited at our expense.

    The undercharged fee block(s) should be “consulted ” on how they will pay their correct dues.

    Question – if the IFA/small trader fee blocks had been undercharged over the last few years at the expense of the FCA’s larger “Friends” , do you think the FCA would ignore the situation ?

  9. Money Marketing | News | 31 January 2014. FCA fines State Street UK £23m for having deliberately overcharged clients £12.3m.

    Yet when the FCA confesses to having, in its previous incarnation, overcharged FS intermediaries £118m (knocking on towards 10 times as much), not only does it escape a fine but it even rejects calls for it to recompense those who’ve been overcharged. Was this massive overcharging deliberate or sheer incompetence?

    Whichever it was, the FCA is effectively free to thumb its nose at the TSC and, for its part, the TSC is powerless to do anything about it. How can Andrew Tyrie feel anything other than impotent and humiliated?

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