The Association of Independent Financial Advisers (Aifa) has warned over the £9.6 million cost of the Financial Services Authority’s (FSA) new data collection project.
Aifa director of policy Andrew Strange called for the FSA to demonstrate the practical application for its data proposals which he argued had significant cost and time implications for adviser firms. He said the proposal to monitor adviser charging through retail mediation activities returns was alarmingly close to economic regulation.
‘We have real concerns about the cost and time implications of these proposals for adviser firms,’ said Strange (pictured). ‘An assessment of service based on price can be dressed up as ensuring value, but is simply price regulation’
Strange also had concerns over proposals to collect complaints data on individual advisers. ‘The Financial Services and Markets Act makes clear that a complaint originates at a firm level, not with an adviser. As many advisers will testify, complaints often arise relating to non-advice issues, such as administration failings,’ he said.
The FSA estimated that the new systems needed to handle adviser charging information and complaints figures for individual advisers would cost between £1.9 million and £1.3 million while firms faced one-off costs of around £6.7 million. The cost benefit analysis for the data collection paper also estimated annual ongoing costs of £2.9 million from the new proposals for businesses.
‘Small firms will have fewer transactions to report and are less likely to need sophisticated systems to enable data record management so reducing their set-up costs,’ stated the FSA. ‘However, this works against them on an ongoing basis as the lack of systems and processes that improve efficiency and regularity of data collection could be influencing their estimates for ongoing costs associated with the new retail mediation activities return data proposals.’
