Intermediaries' finances have been hit from two directions in the past week in a way that deserves additional comment.
Firstly, it has come to light that the expected placing into administration of Millfield Partnership Ltd may yet prove more costly to some intermediaries than may previously have been believed.
In a case outlined to IFAonline, it is alleged members of Millfield subsidiary Millfield South East - which is under the administration of Herron Fisher, although Millfield Partnership Ltd (MPL) apparently has not officially appointed administrators yet – have been left with procuration fees unpaid.
Leaving aside the legalese separating parent and subsidiary, one of the key pieces of information is the statement from Millfield Group in the past week stating it would require FSA approval for a deal that would see MPL assets acquired by Money Portal plc for up to £10.6m.
Secondly, it has come to light the FSA is using excess fees paid by intermediaries to plug its own pension funding gap.
Reaction from IFAs to the poll (below) is suitably strong, but the two issues again raise questions of where the FSA should position itself, considering, for example, its commitments to ensuring confidence in free and fair markets.
Intermediaries - IFAs, mortgage brokers and others - could be forgiven for feeling short-changed twice over.
More worrying is how these actions may result in poorer outcomes for the industry as a whole.
For example, will intermediaries now be effectively forced to switch to fee-based business models relying on payment up-front in order to offset the business and reputational risk associated with the possibility another company such as Millfield may go out of action?
And, on the subject of FSA fees, will intermediaries be forced to raise their prices to cover the additional cost of excessive fees used to plug the FSA’s own pensions black hole?
This possibly could result in a further shift away from the segment of the market euphemistically called “mass-market” which the FSA through its own financial literacy and other activities is trying to target with greater access to advice.
The FSA cannot have it both ways. It cannot raise the cost of regulation simply in order to paper over its own cracks and then expect those affected in turn not to raise their own prices to cover those higher costs - while at the same time arguing the industry should be doing more to spread access to advice.
On both issues – Millfield and fees – the regulator needs to play a straight bat, otherwise respect for its agenda will fade and future problems may be significantly amplified as a result.
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If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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