AIFA has hit out against proposed FSA levies as ‘poor value for IFAs' because it says they bear no link to real-life risks posed by advisers.
The intermediary sector now accounts for almost one fifth of the overall funding requirement, despite posing no systemic risk, the trade body says.
It argues this is "not proportionate" and is calling for an urgent and fundamental review of the Regulator's costs.
"We hope that the planned review by the National Audit Office will form part of this process," says Andrew Strange, director of policy at AIFA.
Particularly unfair is the hit being taken by firms with more than 26 advisers, it says. Under changes proposed today, those firms will be forced to absorb cost rises of 35% to employ extra advisers.
Strange says: "The increase in the FSA's Annual Funding Requirement, of almost 10%, is seven times the current rate of inflation. We will see a welcome reduction in the overall funding for IFAs not holding client money, and the very smallest directly-authorised firms will see a reduced minimum fee of £1,000.
"However, the cost of employing additional advisers for firms with more than 26 advisers rises by up to 35%. This is simply poor value for IFAs."
Firm size is not an appropriate indicator of risk, he says.
"The move to a straight line recovery model for fees neglects the true risk profile of firms. Fees must take account of the sector the firm operates in, and the overall systemic risk that sector poses to the economy.
"The use of regulatory dividends and risk-profiling of firms must be developed."
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