AIFA has applauded changes to the Financial Services Compensation Scheme (FSCS) charging structure, which could save firms up to 617%.
AIFA deputy director general Fay Goddard says the trade body has lobbied hard for FSCS reform and is pleased with the outcome.
“The new model creates a fairer distribution of costs across all parts of the financial service industry and provides better levels of consumer protection,” she says.
"Last year firms in fee-block A13, where most IFAs fall, paid around £1,290 per adviser to meet FSCS costs. Under the new structure, according to the FSA website the levy for 2008/09 for a sole trader just undertaking life and pensions business could fall to £218.
“The FSCS bill for a firm of eight advisers conducting just life and pensions drops from £10,180, to an estimated £1,650."
Goddard was disappointed however with the increase in FSA fees, which she attributes to the cost of implementing the regulator’s enhanced small firm supervision strategy.
"The increase for fee-block A13, where most IFAs fall, is 7.9%. Fees for mortgage intermediaries, block A18, go up by 8.7% and for insurance intermediaries, block A19, by 8.3%," she says.
“We will monitor the FSA's progress with this work to ensure that it is effective in providing the support it promises and in targeting the right firms."
Advisers can also expect a slight increase on last year's Financial Ombudsman Services (FOS) fee changes.
“The general levy for IFAs will be £50 per approved person, plus a flat fee of £60 for those firms that conduct mortgage business and £60 for insurance intermediation,” Goddard says. “These amounts represent small increases on last year.”
But on a more positive note, AIFA says the number of FOS cases is expected to continue to fall.
“Fewer cases mean less money is raised through case fees, which pushes up the general levy,” Goddard says. “To keep a proportionate balance between case fees and levy, FOS is proposing to increase the case fee from £400 to £450 but the good news is that firms will receive three free cases, rather than two."
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