PIMFA, the trade association for the wealth management, investment services and financial advice industry, has voiced its disappointment at recent proposals put forward in the Financial Conduct Authority’s (FCA) fees and levies consultation for Appointed Representatives (AR).
It is of some concern that the FCA has introduced a flat fee for firms without justification or evidence of the issues that it is seeking to address. PIMFA is also concerned that this has been subject to an extremely brief consultation period, which has been presented as a fait accompli to firms.
It is the view of PIMFA that the proposals put forward in this consultation directly penalise firms which are, in theory, best placed to have effective supervisory models of their Appointed Representatives.
Larger firms who have an extensive network of ARs tend to have invested a significant amount of money in their systems and controls and are, by virtue of their size and scale, subject to enhanced supervisory oversight. To this end, the fixed fee approach taken by the FCA is flawed.
Simon Harrington, Senior Policy Adviser at PIMFA commented: “It is extremely disappointing that the FCA has taken these steps to ask firms to contribute an additional £10m to the regulatory pool without articulating exactly what that money is for. More broadly, the decision to, in effect, presuppose the outcome of the work programme – the specifics of which remain undefined – is something of a departure from previous market studies that the Regulator has conducted.
“If the FCA believes that ARs drive significant consumer harm, it would be good to see how and the ways in which additional funding – predominantly from large, well supervised firms with huge investment in their own controls and systems – will go about addressing this.”