IFAs have paid too much for too long - AIFA

The FSA's "astronomical" proposed budget increases for the coming financial year will endanger the survival of good firms, the Association of IFAs (AIFA) warns.

Director general Chris Cummings says the FSA continues to penalise good companies for the actions of the bad, although the regulator says those firms "requiring the most regulatory work and engagement" will pay accordingly.

The FSA claims upward of 10,000 small firms will see their fees reduced, but AIFA argues medium-sized businesses will see a 90% hike.

It adds small firms operating as Appointment Representatives (ARs) will not benefit from the supposed fee-freeze: "They will have to carry this additional burden," Cummings says.

AIFA is proposing an inflationary increase of no more than 3% for intermediary firms and says it is time for a full review of FSA budgets by the National Audit Office (NAO).

The FSA today announced it was upping its annual fees by £117m to £437.7m, but says small advisers will actually see a decrease in their payments, with one-man firms paying around £109 less than last year.

A closer look at the numbers shows the regulator anticipates spending more than £300m of that on staff costs, which it says includes travel, training and recruitment.

Elsewhere, the Financial Services Compensation Scheme (FSCS) is set to increase its budget from £31.5m to £641.5m - just under 2,000% - for the next financial year, but the FSA says deposit-taking firms will bear the brunt in levies.

"We are quite simply not prepared to accept this, and to paraphrase the words of FSA Chairman Adair Turner, 'The IFA community has paid too much for too long'," Cummings says.

"The failings of the financial system rest with the wholesale markets. It is the banks and other organisations that should be forced to pay for their misadventures. FSA should not expect our members to pay for the mistakes of others.

"The FSA's proposed budget now stands at almost half-a-billion pounds. We were hoping for regulatory restraint but instead have seen proposals that endanger the survival of good firms.

"In some instances the regulatory fee rises by as much as 169%. At a time when the Government is trying to help small firms it is clear that this goes against that policy."