Following a recent study which claimed three in 10 advisers could leave the industry within the next five years, PFS chief executive Keith Richards said there needs to be a review of the way regulatory costs are apportioned and allocated.
With the Financial Conduct Authority announcing a fee increase of almost 6%, accompanied by the soaring FSCS levy and a period of negative inflation, advisers are expected to see overall fees rise by 10%, which is expected to also negatively impact consumers.
“Regulation is a key component of providing protection and influencing good outcomes for the general public,” he said. “But it is becoming increasingly unreasonable to continue with an outdated funding system that levies unfairly against a smaller number of contributors in a totally different post-RDR landscape.”
“Disproportionately saddled”
Richards said it is time to establish whether the current system is fit for purpose, pointing to the increasing cost burden which is being shared by a reducing pool of advisory firms.
“Advisers are responsible for a very small percentage of the overall complaints made, yet they are disproportionately saddled with a misrepresentative share of the resultant fines.”
He suggested alternative options should be explored, such as re-directing fines and perhaps the introduction of an investment or policy levy.
“As it stands at present, the uncertainty regarding risk and costs is driving advisers to consider an early exit and restricting the flow of new blood into the profession.
“It is also driving the wrong behaviours, with new entrants trying to meet the growing consumer need for access to advice by operating non-advised or non-regulated models.”
