A retired adviser is currently being pursued by debt collectors for not paying annual fees owed to the Financial Conduct Authority, despite only advising for three months of the year.
In 2022, the adviser, who wished to remain anonymous, decided he wanted to retire after more than 29 years and began the process of transferring his client book to a new firm between January and April 2023.
According to the adviser, he stopped advising at the end of March 2023 and ceased trading on April 4, 2023.
He told FT Adviser: “The handover of my clients was supposed to have been completed by the end of March but because I wanted all of my clients to meet the new firm principal face-to-face the process ran into April.
"Although I wasn't actively advising I didn't want to apply to de-authorise with the FCA until the handover meetings were completed.”
Once all clients had met the new firm face-to-face, the adviser then applied to de-authorise on April 24, 2023.
On July 6, 2023, the adviser received an invoice for his annual fees from the FCA for the amount of £2,329.89.
Following this, the adviser contacted the FCA to raise a fee query and reiterated he had not been advising since March 2023 and had only waited to de-authorise to ensure all his clients had successfully moved over.
In the response, seen by FT Adviser, the FCA said: “Under the FCA’s fee rules, any firms authorised on April 1 will be included in the invoice population for that fee year. That population is billed accordingly to raise the annual funding requirement.
“[The firm] was a regulated firm on 1st April 2023, with cancellation not raised until April 24 2023. It was therefore correctly included in the invoice population for 2023-24 and formed part of our financial modelling and forecasting.
“It is important for the financial services industry that the FCA is fully funded, allowing it to carry out its essential functions. We know firms also value certainty and predictability, to allow them to manage their cashflow.
"It is for these reasons that we do not offer fee refunds when a firm cancels, as this risks a funding shortfall and a consequent need to raise further invoices for firms that remain in the sector.
“While this can feel unreasonable in the individual case, overall, we believe it is the fairest way to share the regulatory burden amongst firms."
The adviser said he was “stunned” that even though the FCA said it seemed “unreasonable” for him to have to pay the full year of fees, he would still have to.
Following this, the adviser sent several emails to the FCA offering to pay the pro rata amount for the number of weeks he was authorised.
He said: “I was questioning how the FCA could run their business in such a way while rolling out consumer duty and focusing on ongoing advice fees.
