New research carried out by the Association of Professional Financial Advisers (Apfa) has shown that the cost of regulation for advisers near to half a billion pounds each year.
Research conducted by the Association of Professional Financial Advisers (APFA) has found that the total annual cost of regulation for the financial advice industry is almost half a billion pounds. This equates to roughly £170 per client per year. APFA is renewing its calls for the FCA to take action to reduce the direct and indirect costs of regulation.
In-depth research carried out by APFA with adviser firms found that for all firms with annual income under £1m (90% of those surveyed), the overall costs of regulation equate to 12% of their income. Based on the latest understanding of the size of the industry, this equates to an overall annual cost of £460million.
The research also shows that the regulatory burden is bigger for smaller firms. For those with annual income between £100,000 and £250,000 the cost of regulation equals 19% of their income, and for those with annual income below £100,000 it is 20%.
Chris Hannant, Director General at APFA, said:
"APFA has written to the FCA with a summary of our findings and a list of areas it needs to address. Good compliance is essential for the industry and for consumers, but the overwhelming feeling at present is that the regulatory burden on advisers is bloated, unnecessarily onerous and potentially damaging to the future health of firms."
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