30th June 2015
What should be the governing factor in setting regulatory fees
Advisers, mortgage brokers and insurance firms are set to pay £74.9m towards the costs of the Financial Conduct Authority (FCA) in 2015/16. Of this, £67.7m is paid by small firms, (those with less than £100,000 turnover).
I’m a one-man adviser firm, who’s been directly authorised for the past 4 years. I’ve only advised on, standard pensions, ISAs and unit trusts wrappers. All very safe, and it’s worked successfully for past 15 years.
The FCA hasn’t telephoned me, requested a meeting, demanded any files or supervised me directly. They look at my RMAR every six months, it’s always pretty boring. I have the odd complaint every 5 years, this doesn’t seem to trouble my solid relationship with the regulator.
I don’t want to be micro-supervised (obviously), so I don’t acquire any value for the £1,000 I pay every year. The money is spent on supervising medium-sized firms, nationals and networks. If my assumption is wrong, where is it spent?
The majority of networks are closing or have the FCA crawling over them investigating UCIS sales, Keydata and other misdemeanours they’ve managed to commit over the past decade. Mid-sized firms are finding costs rising, against either static or dwindling incomes.
The FCA have announced I’ve got to pay another £84.00, in the coming year, as their costs for supervision is rising. Their costs for supervising me isn’t rising! I’m sure the cost for supervising my fellow small firms isn’t either.
The FCA needs to consider that small firms don’t require supervision, have little complaints (according to the latest FOS figures) and certainly don’t receive any value for the £67.7m we give them.
These disparities between nationals, networks and mid-sized firms between the majority of the advice sector, which is one to two adviser firms needs a voice, to put our case. If the nationals and networks require high levels of supervision and monitoring then they should pay for it and not be subsidised by small firms that don’t cause the regulator any concern.
Richard Bishop is a lecturer in financial services and a practicing, regulated financial adviser.
Comments (3)
Regulatory Fees are used to pay the expenses and cost of the Regulator. So the place to start is to ascertain how much the Regulator says they need for the year. This should then be scrupulously analysed and the Regulator brought to account and to justify every penny.
Any wastage should come under draconian sanction. E.G. Florist bills, expenditure on artwork and furniture. Salaries and bonuses. Rent – are cheaper alternatives available? Legal fees. Outsourced consultancy – why is this necessary – you are being paid to do the job. I’m sure readers can draw up exhaustive lists.
Once the final budget is agreed we can then move on to apportionments. Yes, Mr Bishop has a valid point. The charge should reflect the cost to the Regulator. However if there is subsequently a greater work burden placed on the regulator as a result of particular circumstances at a firm that has paid a lower subscription, then this firm should be billed for the cost of that extra work.(Audited of course.)
Harry Katz 06/07/2015 09:46
I'd agree the FCA should be brought to account on its spending, like any externally funded organization that’s not an easy task.
The FCA should be asked to break down what’s spent on small IFAs and on large networks and nationals.
I'm assuming the FCA has a big bill for looking into Sesame recently and those networks who have received hefty fines.
I suppose I'm calling for fairness, which is not something we experience very often from the FCA.
Richard Bishop 06/07/2015 14:03
Harry Katz 06/07/2015 14:33
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