A petition is demanding soon-to-be acting head of the Financial Conduct Authority (FCA) Tracey McDermott enact an independent review of advice firm regulation, after an IFA was forced to pay a 320% increase in his Financial Services Compensation Scheme (FSCS) levy.
Paul Beasley, managing director of the Richmond House Group which has offices in Stevenage and Milton Keynes, started the petition two days ago to vent his "outrage" at receiving his latest FCA fee invoice this week.
He has adressed it to McDermott (pictured), who will take over as acting chief executive from in September after Martin Wheatley's exit, Economic Secretary Harriet Baldwin MP and FSCS chief executive Mark Neale.
According to the petition, Richmond House has been invoiced £53,000 of which £37,000 is in respect of the FSCS for industry-wide life and pensions claims.
This compares with £8,500 last year, a 320% increase.
Beasley said in total his firm now pays £47,500 to the FSCS "to clear up other people's mess", more than it pays for its own professional indemnity (PI) cover.
"This huge increase in the FSCS levy creates additional pressures and further diminishes our ability to deliver an improved client experience," Beasley said in the petition.
"We are fortunate in being able to accommodate this increase. Many smaller firms will struggle and we will see an acceleration in those looking to get out of a profession in which it is increasingly difficult to make a living.
"The publics' ability to source financial advice will be further diminished and advisors will continue to seek out the wealthiest investors, disenfranchising the mass market.
"Financial advice will be increasingly concentrated in the bigger firms that historically have provided inferior service and been the main source of demand on the FSCS," he said.
Lighter touch
Beasley wants "a complete overhaul of the FCA and FSCS", in which smaller independent advice firms would be treated with "a lighter touch supervisory regime, a more proportionate approach".
He argued that the size of the FSCS levy represented "the failure of FCA in its primary duty, effective regulation".
"Huge complicated rule books and a guilty until proven innocent attitude have made advisors an easy target," he said.
Beasley proposed an increase in the minimum levels of PI firms must hold - currently 1.6m euros - and better oversight of audits, rather than the FCA's policy of increasing capital adequacy requirements which he argues prevents advisers from investing in their businesses.
"More detailed PI reporting would ensure cover for a firm's activities were more appropriate and reduce the instances of PI failure," he said.
"It is hardly surprising therefore that the FSCS is called upon to such an extent. The principle of the FSCS levy is fundamentally flawed and inherently unfair."
Regulatory 'failure'
He laid the blame for costly scandals like the £300m failure of Arch cru at the door of product providers, not advisers.
"I know of no other sector, regulatory, public and most certainly not private where such cost increases would be tolerated," he said.
"It is an indictment of the failure of the regulators and their apparent unfettered powers that such an increase can be imposed."
Beasley also attacked the structure of the FCA board, calling it "seriously flawed".
"Only two executive directors and eight non-execs gives minimal accountability.
"The fact that there is no financial director demonstrates a disdain for advisors' finances and leads to waste such as the recent £3.2m on unused software," he said in the petition.
"It is time for the financial advisory sector to voice its concerns before it is too late," Beasley said.
"I have started an on line petition which I implore all advisory firms, advisors and staff to support. We have relied for too long on others to represent us and it has been a dismal failure.
"We need to collectively educate the FCA before they drive us out and deprive our clients of the first class service they currently receive."
So far the petition has gained 17 supporters.
It can be viewed HERE
The FCA declined to comment.
Further Reading:
FCA splits advice from guidance in new complaints rules
MMR review: FCA flags advice risk in overly rigid use of rules
Protection Review 2015: Value chain is ‘all wrong' in protection
