FCA to charge networks £250 per AR as adviser fees climb 1.5%

Firms in the A.13 fee block, which includes those with advisory arranger, dealer and broker permissions, will see their fees increase from £81.1m in the previous year.

The FCA has also introduced a new fee to networks for each of their appointed representatives at a flat rate of £250 per AR.

The regulator said its recent reviews of the general insurance and investment sectors identified "significant shortcomings" in principal firms’ understanding of their regulatory responsibilities for their ARs.

In its consultation paper, the FCA said: "Failings included insufficient oversight of their ARs and inadequate controls over the regulated activities for which they have accepted responsibility. We are increasingly seeing more examples of failings through our supervisory and enforcement work. The range of harms varies considerably - from mis-selling to fraud – but they often stem from Principals’ failure to oversee their ARs appropriately. The new fee will help fund further work to address these harms in whichever sector they occur."

The Association of Mortgage Intermediaries (AMI) criticised the FCA's proposals, highlighting the short five week consultation and the lack of a published business plan to underpin the budget.

Robert Sinclair, chief executive of AMI, said: “It is disappointing that having acknowledged the huge spike in FSCS costs, the FCA is also intent on increasing the cost burden on firms at a time of falling revenues. In apologising for having failed a number of consumers, it is again the good firms who remain who are picking up the bill.

"I am particularly concerned that having found issues in controls over appointed representatives (ARs) in the investments and general insurance space, a broad brush approach has been applied without consultation. To add a cost of £250 for each AR to a mortgage network without evidence of harm seems unfair. AMI will be challenging this rushed change to the rules and the cost to firms robustly.

"For what is another significant addition of new fee classes and costs, a five week response time leaves us very limited time to consult with our membership.”