Ken Davy, Chairman of the SimplyBiz Group, has responded to the FCA Consultative Paper CP14/11 and challenged the apportionment of the costs of the Guidance Guarantee being proposed for advisers.
The Consultation Paper proposes two options; the first would make advisers liable for 30% of the Levy and the second 20%. A third option acknowledges the inherent unfairness of the first two options and seeks guidance on how a fairer system might work.
In an extract from the submission, Ken Davy says; “The benefit to advisers (from the Guidance Guarantee) is likely to be approximately £12.5m per year. It is essential to note however that this is not a cumulative benefit. For the other fee-blocks the benefit is c£39m a year on a cumulative basis. Therefore, within just 5 years the insurers and money managers will have received a total of approximately £549m compared to the advisers total of c£62m and be receiving an annual income 14 times greater than that of advisers.”
Commenting on the FCA Paper, Ken Davy added; "The gap highlighted above and its inequality will continue to worsen year by year on a cumulative basis to the increasing disadvantage of advisers. We have seen with the Investors Compensation Scheme Levy, which continues to place a wholly unfair burden on advisers, how the unintended consequences of regulatory action can damage the sector. We are also very concerned that the Guidance Levy is handing a blank cheque to the organisations tasked to deliver the guidance. We are not against the Guidance Service itself; however it is vital that the costs are shared equitably and properly controlled. Our detailed response to the FCA demonstrates that the adviser fee-block proportion should more properly be of the order of 6% or less rather than the 20% or 30% suggested".