Cummings, says: “While it is good news that FSA will freeze the fees at 2008/09 levels for the smallest firms, larger will see significant increases.
“For example, medium sized firms with more than 26 approved persons will see overall regulatory fees rise by around 90%.
“This will inevitably lead to increased fees for consumers and reduced access to advice at a time when it is needed most. Small firms operating as appointment representatives will not benefit from the supposed fee-freeze – they will have to carry this additional burden.”
He adds: “Every firm in the UK is facing great difficulty and trying to find ways of cutting costs. At this time FSA is doing the opposite by asking good firms for an increase in costs which will result in consumers being charged more for advice.
“FSA’s proposed budget now stands at almost half-a-billion pounds (£0.4bn) – we were hoping for regulatory restraint but instead have seen proposals that endanger the survival of good firms. In some instances the regulatory fee rises by as much as 169%. At a time when the Government is trying to help small firms it is clear that this goes against that policy.
“One of the regulator’s rationales for these budget proposals is to increase consumer trust. However, it has been proven that IFA firms are the most trusted in the sector and enjoy levels of consumer confidence that are at an all time high.
“Why are good firms being penalised for the actions of the bad, when the intermediary community does not pose a systemic risk nor did they cause the banking crisis? This is quite simply a case of our members paying for banking failure.
“FSA misunderstood the market, the firms they needed to regulate tightly and are now asking for significantly more money from the firms who consumers need most to help them through these difficult times. These proposals amount to a tax on success.
Cummings says with this in mind it is proposing an inflationary increase of no more than 3% for intermediary firms.
He adds: “The failings of the financial system rest with the wholesale markets. It is the banks and other organisations that should be forced to pay for their misadventures. FSA should not expect our members to pay for the mistakes of others.
“The cost of supervision has increased substantially since the introduction of FSA. Never in the history of financial services have we had a regulator that has cost us so much.
“The budget set at £437m is astronomical. We will be calling on the NAO to investigate FSA costs and budgeting. We will also be calling for a full review to be carried out every year prior to the budgeting process to ensure that a full cost benefit analysis is carried out.
“We are quite simply not prepared to accept this, and to paraphrase the words of FSA chairman Adair Turner, ‘The IFA community has paid too much for too long’.”