The Association of Professional Financial Advisers made its statement in response to a consultation from the Financial Conduct Authority on how the so-called guidance guarantee will work and be funded.
Announced as part of the chancellor’s spring Budget in March this year, the guidance guarantee looks to ensure all consumers have access to advice before they begin taking their pension.
APFA said, while it supports the move towards greater flexibility for consumers in retirement and believes professional advisers have an important role to play in that, it is concerned about the cosost of the levy.
“Under the FCA’s proposals a disproportionately large amount of the cost will be shouldered by financial advisers and passed on to consumers,” said APFA director general Chris Hannant.
“This undermines the aim of the guidance guarantee: to encourage people to seek help with their retirement planning.”
APFA said it is estimated by the Pensions Advisory Service that the annual cost of providing the guidance guarantee service would be £15m to £10m. The Association estimated therefore that the FCA’s proposed £20m annual levy, would cost advisers between £4m and £6m per year.
It added that retained profits in financial adviser firms in 2013 totalled £128m – therefore a levy of this size would represent between 3%-5% of advisers’ retained profits.
Hannant added: “The FCA’s current plans are unfair on advisers, and ultimately, unfair on consumers. It’s vital that when finalising its levy the FCA uses a method that reflects the relative size of different sectors and the benefits they are likely to gain.
“We think a fairer method would be to allocate the levy on the basis of firms’ turnover, utilising information already held by the regulator. This will ensure that contributions are distributed proportionally and fairly across the industry.
“We will continue to work closely with the FCA and other parties over the coming weeks and months to ensure the best outcome for advisers and consumers.”
Industry experts hit back at the FCA last month describing the government as being "unrealistic" over its plans. Click here to read more
