The UK's finacial regulator, the Financial Conduct Authority (FCA), has announced a 1.1% decrease in the annual fees they pay the regulatory body.
The decreased contributions will come into effect in the current tax year, 2019-20, even though the FCA forcasts a rise in its overall running costs over the same period. The FCA is proposing financial advisers will collectively pay £79.4m in the current tax year.
The overall FCA budget will increase by 2% YoY.
Dealing with Brexit will be the most immediate challenge we face. But this plan also commits us to a stretching programme of work across the financial sector."
The fees announcement, however, was met with scepticism by some in the industry. Ross Denton, a consultant at Altus, argued overall advisers will be increasing their contributions: "While the FCA is announcing a headline drop in adviser fees of 1.1% in its latest consultation paper, this only equates to £0.9m in real terms.
Denton added, "This will be offset by the incoming levies for the new Money And Pensions Service (MAPS) agency, which will take the required contribution from the advice community from its previous level of £2m to the previous agencies it is replacing up to £4.3m in the 19/20 tax year. When you factor this in, the actual net contribution from advisers into government regulatory style bodies will actually be increasing by around £1.4m a year."
2019-20 business plan
The announcement came as the FCA set out five priorities for the year ahead, which include introducing a new prudential regime for MiFID investment firms. The FCA's top priority was Brexit, with its focus to help ensure an "orderly transition" for the financial services sector.
The FCA said its remaining key priorities were to:
• Work on firms' culture and governance, which includes extending the Senior Managers and Certification Regime to all firms
• Ensuring the fair treatment of firms' existing customers by monitoring firms' practices, including the information they give prospective and current customers
• Developing the work being done on operational resilience, and
• Combating financial crime and improving anti-money laundering practices, by enhancing the use of technology and data, as well as engaging with multiple agencies and government bodies
In its Business Plan 2019-20, the FCA stated: "The new regime aims to reduce unnecessary costs to firms. It will include new rules and have implications for both our authorisation and prudential supervision of investment firms. There will also be changes to reporting requirements."
Andrew Bailey, FCA chief executive, said: "Dealing with Brexit will be the most immediate challenge we face. But this plan also commits us to a stretching programme of work across the financial sector.
"In order to ensure we are a regulator that continues to serve the public interest, we need to adapt to the ever-changing environment. This is why the future of regulation is a key priority in this year's Business Plan. We will be leading a debate about this with stakeholders so that we can keep pace with the developments taking place in the markets that we regulate and in wider society."