As the deadline for responses to yet another Financial Services Authority (FSA) consultation paper passes – CP125: FSA Fees 2002/03 – it has been confirmed that financial advisers pay more for regulation than individuals in any other industry.
The consultation period for CP125 ended on 15 April and the results should be published later this year. The proposed fee structure has been designed to benefit sole traders, who previously had to pay similar charges to firms with several intermediaries. Whereas previously a four man independent financial adviser (IFA) firm had to pay around £1,000 more than a sole trader (£2,630 against £1,670) now the rate for sole traders will be reduced slightly, while the rate for partnerships will rise dramatically. On a sliding scale, firms will have to pay a yearly rate of £1,400 for a one man operation, £2,095 for a firm of two advisers, £2,790 for three and £3,485 for four.
This change starts to bring the FSA in line with regulatory bodies in other industries, which charge an annual rate to individual practitioners, rather than firms. However, in comparison, the FSA’s charges seem disproportionately high. Members of the Institute of Chartered Accountants (England and Wales), for instance, pay a total of £238 pa, while the Royal College of Veterinary Surgeons charges its members an annual subscription of £208 in return for accreditation and regulation.
Only the Law Society approaches the cost of the FSA’s annual fee, charging each individual solicitor £650, complemented by a £200 charge to fund the regulator’s compensation fund.
The FSA remains defensive, however, pointing to the fact that; US financial services regulatory costs are around 18 times those of the UK.