The Association of Independent Financial Advisers (AIFA) and the Association of Mortgage Intermediaries (AMI) have called for a reduction in the financial demands proposed for intermediary firms, given their lower risk nature.
AIFA and AMI have called specifically for the FSA to:
- Refocus costs onto the higher risk sectors where more intrusive regulation is needed - and not ask the intermediary community to pay more
- Maintain exclusion for the smallest IFA firms from fee increases
- Invite the National Audit Office (NAO) to review the FSA budgetary process and conduct a regular value for money assessment
- Adopt a cost/benefit process in determining the FSA budget
- Slim down the number of priorities and projects at FSA to look more deeply into the most important areas
It also suggested areas which needed to be considered as part of a funding review of the FSA.
These include deciding how the FSA should operate with 'divisional boards' focused at market level a possible answer.
"Thus we could see a focused business unit overseeing the mortgage market, general insurance industry etc. rather than the small firms, high street firms etc. current split," the response says.
The trade bodies also say the FSA Board would need to be reviewed "as the simple principle of 'no taxation without representation' should hold true at the highest levels of the regulator."
"Those who are asked to pay for regulation should be represented on its Board - but with a clear consumer advocate role also represented."
Andrew Strange, director of policy at AIFA and AMI, says: "The intermediary profession has been rightly exercised by the fee increases proposed by FSA. We firmly believe that those sectors of the industry who pose most risk should pay proportionately more.
"The proposed fee increases, combined with other costs such as the Retail Distribution Review, pose a real danger to good IFA and mortgage intermediary firms during a deteriorating economic climate. FSA must refocus its costs or face driving good firms out of the industry and denying consumers access to much needed independent financial advice.
The full submissions are available here:
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Responding to letter from Treasury Committee chair Nicky Morgan