"What, however, it might well lead to is advisers as a collective looking at what they are being asked to pay just to be able to do business."
In that regard, advisory firms, and mortgage networks like ours, undoubtedly understand the burden firms in the sector must bear with those costs, albeit we might not see the reasons why we are deemed culpable for the ‘sins’ of those working in parts of the financial services marketplace, other than our own.
And on that note, when the playing fields appear to be anything but level then it’s only right and proper that we feel able to express our dissatisfaction with the approach, the cost, and the process, and also support the same sentiment from our trade bodies.
It was therefore absolutely right and proper that AMI and its Chief Executive, Robert Sinclair, took the opportunity recently to express its “deep concern” about the FCA’s fees and levies consultation which, as a starter for ten, is only five weeks long and there appears to be no business plan published to underpin the budget.
Robert, and we certainly share his frustration, was also less than impressed with the proposals which sees a new levy on networks and their members of £10m – a charge that was not consulted on last year and a ‘backdated levy’ which he says, “breaches all principles of fairness”.
Of course, this is not a one-off, in fact it’s the second such regulatory fee increase inside a year, after the FSCS’s hike in the levy for mortgage brokers, which at one stage was £23m, has since been reduced to £11.5m but is considerably more than the £3m the sector funded last year.
Again, let’s reiterate, we all recognise the need for those operating in the mortgage and protection market to have to pay these fees – we’ve all been doing it for long enough and, I suspect there’s even a part of us that has recognised that we’re fortunate if these fees only increase marginally each year, having long since given up on the much talked about ‘regulatory dividend’ which despite the quality of our work, the low level of complaints, etc, never seems to materialise.
But huge percentage increases, new levies on top of the existing ones that are on the rise, and an ongoing belief we are very much paying for the poor practices of others, can’t help but render this a wholly unsatisfactory series of proposals and outcomes.
Clearly, one of the benefits of being part of a network is that it can help insulate member firms against these types of increases, plus of course we can use the strength of our voice, our association with AMI and the like, to press home to the regulator what practitioners in our market regard as the inherent unfairness in all of this.
There has been some suggestion that such actions from the FCA, the new network levy in specifically, might lead to some sort of mass exodus by AR firms from their network Principals to directly authorised status, but very clearly there is a significant level of protection afforded by networks that large numbers of advisory firms appreciate, especially when their general costs of business are rising.
What, however, it might well lead to is advisers as a collective looking at what they are being asked to pay just to be able to do business. Few other sectors which are so readily reliant on smaller to medium-sized firms have to suffer such a high regulatory cost burden, even if the FSCS is trying to promote a £8.5m increase for its levy as some sort of triumph. Consumer choice could well be reduced as an unintended consequence.
We don’t believe a large number of advisers will change their authorisation route, but we should all be concerned that the these increased regulatory costs can lead to advisers leaving the sector all together. Deciding that, when they do their sums, the amount of money they can earn for a day’s advisory work is far below what they might be able to secure in other sectors.
That is the real danger here and it is imperative that those in charge of our regulatory regime, revisit the recent debacle and reconsider the considerable impact on the health of our mortgage advice sector and the consumer detriment which results from reducing access to quality advice.
