AIFA unhappy with FSA and FSCS budgets
Commenting, Andrew Strange, director of policy at AIFA, said: “The increase in FSA’s Annual Funding Requirement, of almost 10%, is seven times the current rate of inflation. We will see a welcome reduction in the overall funding for IFAs not holding client money, and the very smallest directly-authorised firms will see a reduced minimum fee of £1,000. However, the cost of employing additional advisers for firms with more than 26 advisers rises by up to 35%. This is simply poor value for IFAs.
“The intermediary sector now accounts for almost one fifth of the overall funding requirement. This is not proportionate as the intermediary sector does not present a systemic risk. We urgently need a fundamental review of the regulator’s costs. We hope that the planned review by the National Audit Office will form part of this process.
“The move to a straight line recovery model for fees neglects the true risk profile of firms. There are many more appropriate risk indicators than firm size and we are disappointed that FSA has not considered this further. Fees must take account of the sector the firm operates in, and the overall systemic risk that sector poses to the economy. The use of regulatory dividends and risk-profiling of firms must be developed.
“The additional burden of the further £70m interim levy in the investment intermediation sub-class of the FSCS is a further blow for IFAs today. AIFA has already met with FSCS to discuss the true nature of those classed as providers, such as Keydata. We will continue to argue that these costs should be borne by the provider sub class.”