UK financial advisers believe the rising cost of compliance and insurance are the main causes of rising costs, according to research from Canada Life.
Most IFAs (81%) have pointed the finger towards the increasing burden that compliance has put on them, whereas 61% think higher insurance payments are responsible for breaking the bank.
UK advisers performing defined benefit pension transfers have been hit with significantly higher PI insurance premiums, following the Financial Ombudsman Service decision to raise the compensation limit to £350,000 ($437,386, € 392,633) from £150,000.
Just 6% of financial advisers think Brexit is to blame, while 5% said that marketing costs have risen.
Only 7% did not believe costs had increased at all.
“Compliance and insurance are inseparable when it comes to costs, but that can also be a good thing as there can be a shared solution,” said Neil Jones, tax and wealth specialist at Canada Life.
“Typically, the higher the compliance risk the higher the premium.
“Smaller firms should make sure they have clear structures in place in their organisation that focus on complying with regulations – this gives insurers a degree of confidence that can result in reduced premiums.”
Not all about Brexit
“While Brexit is a familiar figure of blame for many ills, so far only a few advisers think it’s causing rising costs,” Jones added.
“Advisers may well be holding their breath here to see how Brexit unfolds.
“However, there are areas where we can be clear on the potential impacts of Brexit. Some international jurisdictions may well be better than others when it comes to costs.
“The Isle of Man is not part of the EU/EEA today and so we should see no change to the trading relationship between the Isle of Man and the UK as a result of Brexit.
“Likewise, we expect no change via Dublin, which is expected to be subject to the existing EU regulatory regime as it is currently.”
