FCA confirms fees for advisers; will not reimburse 'overcharged' fees

clock

The Financial Conduct Authority (FCA) has confirmed advisers' regulatory fees for the next year will be £68m - a near-19% reduction on last year, in its latest policy statement.

The FCA dismissed claims from trade bodies the 15% of total annual funding allocated to the adviser fee block, A13, is too big a share and calls to split A13 to reflect 'retail' and 'wholesale' sales.

It also fought back calls for a reimbursement of the fees it was deemed to have 'overcharged' advisers, saying the cut to fees "does not mean that some firms have been historically ‘overcharged' any more than others have been ‘undercharged'".

In February, Treasury committee chairman Andrew Tyrie accused the regulator of overcharging the advice community and asked for a refund of fees at a grilling of FCA chief executive Martin Wheatley and chairman John Griffith-Jones.

Adviser fees were reduced as a result of a policy change announced by the regulator last year, which sought to correct an 'anomaly' in the fees system that meant advisers with permissions to hold client money were sometimes paying less.

> Read: Adviser FCA fees down 19% after fee block realignment  <

The FCA said: "Overall, we believe that the current 16 sub-sets of the ‘A' fee-blocks represents the right level of recognition of the diversity of authorised firms, which account for 92% of our annual funding requirement (AFR) - a level across which we can allocate our AFR with reasonable accuracy and transparency.

money-gavel"We estimate the amount recovered from financial advisers to be £6m (8.5%) and the number of financial advisers to be 55% of the total firms that pay fees in A13.

"Financial advisers will benefit from the policy change we made (...) as they will be in the wider A13 fee-block, now with much larger firms. As a result, they will pay less fees even though the AFR allocated to the fee-block is larger."

In its policy paper the FCA also said it is maintaining the minimum fees it charges small firms - typically £1,000 up to £100,000 of income - for the coming year but will consult on alternatives for its calculation in upcoming consultations.

Earlier in the year it emerged the regulator had scrapped its review of the way it allocates fees, citing a "lack of consensus" among stakeholders on viable alternatives.

The Association of Professional Financial Advisers (APFA), which has long been campaigning for a reduction in regulatory fees, said in its latest research the cost of regulation remains a massive barrier to development for firms.

More on PMI

Bupa UK launches youth internship programme

Bupa UK launches youth internship programme

In partnership with Career Ready

Hemma Visavadia
clock 24 May 2022 • 1 min read
Sedentary lifestyles could derail UK's health recovery: Bupa
PMI

Sedentary lifestyles could derail UK's health recovery: Bupa

New research shows

Hemma Visavadia
clock 19 May 2022 • 2 min read
WPA increases members discount options
PMI

WPA increases members discount options

Access to more health and wellbeing benefits

Hemma Visavadia
clock 18 May 2022 • 1 min read

Highlights

The COVER Review May 2022: Women in Protection, Cost of Living & Consumer Duty

The COVER Review May 2022: Women in Protection, Cost of Living & Consumer Duty

Now available for members to watch

John Brazier
clock 24 May 2022 • 1 min read
The golden opportunity for Group Income Protection

The golden opportunity for Group Income Protection

"I won’t ever end my advice journey with a client until I’ve talked GIP"

Lee Thomas
clock 20 May 2022 • 6 min read
The Rising Stars of Protection: Karla Edwards

The Rising Stars of Protection: Karla Edwards

“I don't want to be the biggest insurance firm; I want to be the best”

John Brazier
clock 11 May 2022 • 7 min read