Lakey: Why the FSA's data proposals may lead to price control

The FSA may use the extra data it plans to collect from adviser firms to control the price of advice post-2012, Alan Lakey says.

Yesterday, the regulator proposed collecting a detailed breakdown of firms' income through adviser charging, including number of clients, how they paid and how much they paid.

Used alongside the product sales data (PSD) it already collates, the FSA said it wanted to calculate the average adviser charge so it could spot pricing anomalies in the market and better protect consumers.

Adviser Alliance founder Alan Lakey said while some of the proposals were sensible, others could carry "nasty overtones" which could see the regulator rein in firms for charging fees they consider are too high.

"These proposals around collecting adviser charges could be used as a means of assessing the quality of firms by the fees they charge," he said.

"Knowing the FSA - with its regulatory creep and ambitions to expand domain into other areas - it would not take too much of a logic jump to say the data could be used for further intrusive attacks on advisers."

Lakey recalls an FSA compliance visit to a London firm a couple of years ago in which he claims the regulator took the view the fees it was charging were too high.

"This is not something for the regulator to determine," he said.

Whilst Lakey said the FSA could not impose a maximum fee agreement, he thinks ongoing ambiguities over the role of the Office of Fair Trading, coupled with the "elastic" interpretation of the TCF principle, could see the regulator expand its remit into the competition realm.

"Would the FSA visit me for charging more than another firm? It would not surprise me if they were to call on firms and make comments about them charging too much if they took the view there is an acceptable and unacceptable fee."

Whilst Lakey, partner of Highclere Financial Services, stressed it is important the FSA does collect data from firms - especially if some attract a large amount of complaints - it is a question of correctly using the information.

"One incorrect way of using this data would be if the regulator were to make value judgements on firms' values and ethos.

"All regulators have probably shown to become increasingly intrusive - the more they know the more they want to know."