One fifth more advice firms gave up their FCA authorised status in the year leading up to June 2020 than the year before, a freedom of information (FOI) request submitted by Professional Adviser has found.
The FOI, submitted to the Financial Conduct Authority (FCA), found that in the 12 months leading up to June 2020, 252 advice firms gave up their authorised status. However, that number was 210 in the 12 months previous.
Philip J Milton Chartered financial planner Felix Milton said he found the FOI worrying for two reasons: “With the average adviser being more or less ‘at retirement’, any slight change that makes doing business harder is going to encourage those to shut up shop, by either sale to a larger firm, which of course removes the need for that individual firm to be authorised, or by simply winding down gradually.”
He added: “I think this pressure has been brought on by increased regulatory bills and professional indemnity bills, which are making it harder for the smaller firms to give advice.”
Meanwhile, Money Alive chief marketing officer Ian Beestin said the results were a “concerning development” and that it would be useful to understand more about how it impacts on the capacity of the sector to give advice.
“It is a tough time for advisers and the communities they serve and more joined-up campaigning about the value of advice would serve the industry well.”
It comes as advisers have been feeling under increased pressure in recent months as their share of the Financial Services Compensation Scheme (FSCS) levy increased.
Advisers were stunned by the extra amount they were asked to pay in an invoice that came from the regulator, and takes into account the FCA periodic fee, the FSCS levy fee, the Financial Ombudsman Service levy fee, Financial Guidance levy fee, and illegal money lending levy fee.
Before the extra increase, advisers were already concerned over the levy charges. Many wrote to their local MP to express their worry, arguing the current funding model is unfair, forcing the ‘good guys’ to pay the price for others going out of business.
This article was previously published on Professionaladviser.com