7th July 2015

Why am I paying for the supervision of networks?

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.

Regulation