PosSol partners hit by charges increase

Positive Solutions is upping the charges it levies partners, citing “substantial” increases in professional indemnity insurance costs and FSCS bills.

The biggest increase will hit those bringing in less than £50,000. From 1 July, the Aegon-owned national IFA will retain 35% of that income, up from 30% year ago.

Partners earning between £50,000 and £70,000 will be charged 27%, up 2% from last year, while those earning between £70,000 and £90,000 will also see a 2% increase, to 22%.

Higher earners will also be affected. Previously, partners earning above £155,000 were not charged at all by Positive Solutions, but now earnings between £90,000 and £175,000 will be charged at 6%, while earnings above £175,000 will be charged at 1%.

This July's increase represents a double hit for partners, who last year saw the company increase its retention thresholds by £5,000 across the board.

This meant partners had to find more income than previously if they wished to climb an earnings band and retain a larger chunk of the profits.

Positive Solutions CEO Jim Reeve (pictured) says the company's hand has been forced by increasing regulatory costs.

He reminded partners the company had not upped charges in ten years, and has previously absorbed any increase with no impact on partners.

On this occasion, he says the company is passing on about half of the increase, absorbing the rest.

Since 2009, FSCS costs alone have been £1.9m, FSA costs have increased considerably, and PI costs have increased by 50%, Reeve says.

Positive Solutions' contribution to last year's £80m FSCS interim levy following the collapse of a number of high-profile investment businesses, including Keydata, was £1m.

This year's FSCS interim levy, again covering the cost of compensating Keydata customers, was £93m.

Reeve says he is confident the charging increases faced by Positive Solutions advisers remains below those faced by network members and directly-authorised firms.

"In recent years we have absorbed these costs on the basis they might be temporary," he says. "It is clear now that, at least for the medium-term, they are not.

"As you know, although we are financially robust, we have made trading losses in recent years, and this is not something we can bear indefinitely.

"I would like to reconfirm my commitment to Positive Solutions being the best value advisory business in the market.

"Our long-term aim is to improve the already high-level of service we offer to partners whilst driving down unnecessary costs.

"If we are successful in this endeavour, we will share the benefit of these savings with you in the future, and this will be reflected in our charges."