“We acknowledge that our fees are a cost to financial advisers and that cost may be passed on to consumers of their services,” the FCA said in a policy statement.
“However, we believe that the funding those fees provide enable us to meet our objectives, including protecting consumers, resulting in a benefit for consumers.”
The regulator added in its justification for the decision that the total income reported by financial advisers who would have to pay the fees was around £2.6bn, which meant the total fees paid by them of £7.2m represented only 0.3% of their reported income.
Not surprisingly industry bodies were disappointed by the move and have predicted that the fees would ultimately be passed onto consumers.
“There are limits to what advisory business can take,” said Chris Hannant, director general of the Association of Professional Financial Advisers (APFA).
“Just to say it’s a small fee is no justification. If you can run things cheaper, you run it cheaper. It’s as simple as that.”
Last month APFA called on the FCA to freeze its budget for two years to give its members a break from having to meet the steadily rising fees and Hannant said it was likely the association wouldm keep challenging the FCA to improve its efficiency rather than keep raising fees.
Garry Heath, director general of Libertatem, a new trade association which represents financial advisers, promised to mount a countrywide campaign to persuade parliament to change the current system and stop what he called “this abuse of power”.
“We have to make the regulator be more accountable, to cut its costs and its intrusiveness and to ensure that the maximum numbers of advisers are available to the broadest section of society,” he said.