The FSA published its annual report for 2008/09 last month, the second half of the tax year reflecting the problems resulting from the credit crunch and recession. According to the report the number of regulated firms decreased to 27,340 and the number of approved persons (people able to provide financial advice at all levels) shrank to 166,420. If we assume that there are 60m people living in the UK, this equates to an average of 1 “adviser” per 360 people.
The most significant rise in figures was the level of fines levied by the FSA which rose from £4.4m in the previous year to £27.3m with 58 advisers struck off (less than 0.03% of “advisers”). These figures include the Banking sector. Ironically, the FSA did not raise enough income in fees to cover their own costs of regulation (£335m), which were short by £14m, so fees are likely to continue to rise for IFAs partly to cover the shortfall and partly due to the reduction in the number of individuals and firms. So it would appear that IFAs will continue to pay the price for regulation.
It will not help that according to some recent research conducted by MetLife, 1 in 7 of IFAs (about 15%) are seeking to sell their businesses this year. I can reassure our clients that we have no plans to sell the business.
Another irony is that the FSA’s Final Salary Scheme which is now closed to new members of staff (since June 1998) had 495 members, who may be somewhat to concerned that the scheme is still in deficit by a whopping £88.9m, but they remain committed to clearing the deficit by 2019.
I will make no comment.
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