The Association of Independent Financial Advisers has slammed the disproportionate way the Financial Services Authority levies costs on advisers and has presented the regulator with a series of measures that would slash the bill for advisers by at least £45m.
AIFA has published its response to the FSA’s fees consultation paper today.
As part of its response, AIFA has put forward evidence produced by forensic accountants RGL Forensics which lays bare the extent that advisers are footing the regulatory bill.
RGL Forensics has outlined a series of measures that would bring about a fairer distribution of costs.
One short-term reform that has been mooted by RGL Forensics would be to change the way indirect costs are allocated.
By basing fees on firm profitability, the accountants estimate that the bill for intermediary firms would be cut immediately from £70m to between £22.7m and £24.6m.
Chris Cummings, director-general of AIFA, says the adviser profession was not the cause of the crisis, so should not be forced to pay for those who pose a bigger risk to the economy.
He says: “The FSA needs to radically overhaul the way it allocates its costs.
“IFAs are being burdened with a disproportionate and unfair share of the costs of regulation, which are ultimately and inevitably met by consumers. To deliver a fairer system we are seeking a reduction in fees for the intermediary sector.
“The analysis from RGL Forensics sets out a simple redistribution of FSA’s indirect costs that are currently allocated to the fee blocks without justification. This would be a significant step forward. We then hope the regulator will work with us, and RGL Forensics, and the rest of the industry on a radical overhaul of the entire fee system.”
The FSA has committed to study the proposals submitted by AIFA.