Advisers have raised concerns about the fee hike following the regulator’s recent proposal to include crypto firms into its remit.
Earlier this month, the Financial Conduct Authority published its fee proposal document and said its scope to include crypto firms has increased fees by £8mn.
The regulator said the fee will go towards the costs of developing IT systems and recruiting extra staff for the project.
Although the FCA is not responsible for regulating how crypto firms conduct their business with consumers, they have recently been brought under the regulator’s supervision under the money laundering and terrorist financing regulations.
However, some advisers have hit back on why they should cover the cost of any failure for a product they would not or cannot recommend.
Greg Power, an IFA at Lifetime Financial Planning, said: “As crypto assets were a non-regulated investment for many years, and as an adviser(s) we wouldn’t include it as a recommended investment, the regulator is now saying what the costs are, insinuating that the industry as a whole need to cover that cost.
“But surely that cost of regulation should in my opinion be covered by those providers who promote and the advisers who decide to include it as a recommendation to clients.”
Likewise, Tim Morris, IFA at Russell & Co said he spotted the link between crypto regulation and the regulatory fee increase.
“While I’m all for competition, it’s good to see 80 per cent of applications being rejected by the FCA. Cryptocurrency is still the wild west when it comes to issues such as cybercrime.
“Regulation should improve that and because Bitcoin has become mainstream and is already available within funds in the US & Europe, the UK would be left behind if it does not follow suit.”
Morris explained that people will continue to “invest” in crypto regardless and so it is important that it is done in a safer environment.
“After all, what is the point of a body that is meant to protect consumers if it constantly fails to do so,” Morris added.
“To be clear, I disagree that we should pick up the bill now or in future. The trouble is, if you go down the ‘polluter pays’ route from the start you would limit the number of advisers who will advise on it. That would mean the public will continue to invest themselves.
“For that reason and to keep financial advice relevant for current and future clients, I don’t see that we (advisers) have any choice but to absorb this cost.”
A parasitic operation
Yet while many advisers feel the wrath of the fee increase, not all of advisers feel the same.
Philip Martin, managing director at Unique Financial Planning, said he understood the concerns around the fees but said FCA fees are applied across the entire set of business lines.
