The Association of Professional Financial Advisers (APFA) has launched its third annual survey of the advice industry to feed into the ‘Cost of Regulation Index’ that it compiles for the sector.
The index allows APFA to monitor the annual direct and indirect costs of regulation and compliance.
Last year’s research found that in 2014, smaller firms spent on average 12 per cent of their income on direct and indirect regulatory costs; 3 per cent of this was spent on direct fees and levies, with 9 per cent on indirect costs.
This meant that in total the sector spent an estimated GBP475million on regulation, with the average client paying approximately GBP160 per year towards the cost of FCA rules and requirements.
The launch of the survey comes a few weeks after the UK voted to leave the EU and while HM Treasury and the FCA take forward the recommendations of the Financial Advice Market Review (FAMR) to try to close the advice gap.
In its response to the Review, APFA had noted that a fundamental rethink of the existing regulation was needed to try to cut the “significant regulatory burden” on the advice profession.
Chris Hannant, APFA director general, says: “Last year’s survey showed that advisers spend a significant amount of their income on complying with the many rules and regulations imposed upon them. This cost burden gets passed onto clients through higher fees, further widening the advice gap that the government’s Financial Advice Market Review aims to reduce.
“At a time when the advice community needs to fight for a fair deal from the UK-EU Brexit negotiations and as the FCA and Treasury implement the FAMR recommendations, it is more important than ever that we have the up-to-date information needed to hold the FCA to account.
“Although the survey itself takes a very short time to complete, we appreciate that people will need to collect the information required for the survey. However, we strongly urge the industry to take part and help us continue to lobby for a better regulatory deal for advisers.”
