Panacea: FCA should give industry 'good guys' a free ride

The FCA stated yesterday that “We continue to believe that the 8.4% increase in minimum fees is proportionate as it ensures that firms who only pay minimum fees continue to make a fair contribution to the recovery of our costs."
 
Whilst noting that the proposed fees for smaller firms will increase from £1000 to £1084, the issue Panacea believes that smaller advisory firms have is with the “recovery of costs” element.
 
During 2014 Banking fines were £1,462bn. In context, the total revenues raised for alcohol and tobacco in 2014 was £197bn - that equates to 4% of total UK taxation revenues according to HMRC figures.
 
The FCA was obliged by statute to pay away £1.370bn of the fines the Treasury, the equivalent of 70% of alcohol and tobacco levies for 2014.

However Panacea responded that fines are not being used to reduce costs in a way that should be expected.
 
It argued that the biggest obstacle to consumers getting easy access to independent financial advice is cost, and that the biggest cost to financial services firms after salaries are for regulation.

In a statement, Panacea said:
 
"Surely it does not take too much cerebral activity to calculate that with the FCA costs of £264m plus the FSCS budget of £313m, fines exceed regulatory costs by £894,431,800.
 
"This should mean that offsetting fines against the cost of regulation and compensation levies could have given the industry ‘good guys’ a free ride for over two years and subsequently, those harder-pressed consumers access to financial advice at a very much reduced cost as they would then benefit too from the reduction in the regulatory cost burden.
 
"As a result Panacea believes that these fines could have also funded the FSCS based upon the current budget for at least four years, again reducing costs for consumers.
 
"We feel that any fee hike made against the backdrop of fines being paid away is simply unfair and fine usage should be taken into consideration."