Advisers hit with higher regulatory costs spread among fewer firms

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Final figures on Financial Conduct Authority fees show advisers will be hit with higher regulatory costs than expected which will be spread among a smaller number of adviser firms.

The FCA has published its policy statement on regulated fees and levies for 2013/14, following a consultation in April.

The policy statement reveals while the proportion of the £432.1m FCA budget that falls on advisers remains the same as the April consultation at £41.9m, they will receive a smaller fees discount as result of retained FSA fines.

The A13 fee block, which covers most financial advisers, will receive a £3.8m fees discount, rather than the £4m first proposed.

The discount means advisers in the A13 fee block will have to pay a total of £38.1m in regulatory fees, up 16 per cent from £32.8m in 2012/13.

The cost burden will also be shared among fewer firms than first thought. In April, the FCA estimated the number of firms in the A13 fee block had fallen from 7,086 in 2012/13 to 7,000 for 2013/14.

It now estimates there are 6,788 firms in the A13 fee block for the next financial year.

Around 42 per cent of FCA firms will continue to pay the minimum fee of £1,000.

The FCA will now start invoicing firms following the policy statement.

The FCA announced in April it is carrying out a review of how firms’ regulatory fees are calculated. Options include segmenting the industry based on income, or replacing the current-fee block model with a fees system based on risk.

In its policy statement, the regulator says it has met with 10 trade bodies as part of the fees review and will meet with other stakeholders who asked to take part.

The FCA plans to issue its proposals for changing how fees are allocated in October or November.