Analysis from forensic accountants RGL Forensics, submitted in support of the response, outlines how IFAs face a disproportionate bill from FSA. AIFA argues that the regulator should focus its attentions on those organisations that present greatest risk and reduce the regulatory burden on the IFA profession.
RGL Forensics has outlined a series of measures that would bring about a fairer distribution of costs. The first step is achievable before the fee levels are set this year. This reform looks at the allocation of indirect costs while a more substantial, longer term proposal would mean a review the entire fee block regime to bring about a much fairer system for all. Under the first proposal, with the cost allocation based on firm profitability, the bill for intermediary firms would be cut immediately from £70m to between £22.7m and £24.6m.
Commenting, Chris Cummings, director general of AIFA, said: "The intermediary profession was not the cause of the banking crisis. Therefore it should not be forced to pay for greater scrutiny of those sectors that pose a systemic risk to the economy. FSA needs to radically overhaul the way it allocates its costs.
"IFAs are being burdened with a disproportionate and unfair share of the costs of regulation, which are ultimately and inevitably met by consumers. To deliver a fairer system we are seeking a reduction in fees for the intermediary sector.
"The analysis from RGL Forensics sets out a simple redistribution of FSA's indirect costs that are currently allocated to the fee blocks without justification. This would be a significant step forward. We then hope the regulator will work with us, and RGL Forensics, and the rest of the industry on a radical overhaul of the entire fee system.
"We are grateful for the commitment FSA has given to study these proposals. While we remain committed to the intrinsic principle of protecting consumers the regulator must deliver a fairer system for all."
