The FCA has published its Policy Statement on the fees and levies which it charges the industry. A copy of it can be found here.
The total that the industry will be paying this year is £558.5m – a whopping increase from last year of 2.7%! This increase is mainly because of changes in areas such as consumer credit, claims management firms, and the Office for Professional Body Anti-Money Laundering Supervision (OPBAS).
As with all budgets, some areas will come off better than others, General Insurers and Life Insurers have seen their fees increase by 3.3% and 3.4% respectively. Mortgage advisory firms have been hit with a 4% increase, which is one of the highest. The size of this increase, however, is mainly caused by a Mortgage Credit Directive (MCD) rebate that firms benefitted from last year, which was a one-off payment.
Financial Advisers will this year benefit from a 1.1% decrease in the fees it pays. However, with FOS case award limit increases now at £350,000 and the subsequent impact this has had on PI insurance premiums, adviser firms are still likely to be worse off this year compared to previous years.
The FCA has said on several occasions that it wants to support smaller businesses and is aware that the levies firms pay, impact on whether a firm remains in the market. As we have seen recently with a number of firms withdrawing from the DB advice market, (owing predominantly to PII price hikes) an increase in annual costs is likely to see a number of firms taking a serious look at what services they continue to offer. This means that in the long-term consumers will lose out.
The review for next year’s fees starts in November, based upon the increases this year and in previous years, it might be worth starting to check down the side of the sofa for loose change…