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24 February 2015

The Association of Professional Financial Advisers (APFA) has responded to the proposed plans and budgets for both the Financial Services Compensation Scheme (FSCS) and the Financial Ombudsman Service (FOS), calling for immediate action to reduce the costs of both bodies on the advice profession.

According to APFA, the ever increasing cost of FSCS has reached a point where an independent audit of its strategic projects is now necessary.

Chris Hannant, Director General at APFA, commented:
“Despite a small decrease in FSCS’s management costs this year, the cost of continuing operations keeps increasing. We’re particularly concerned about the amounts being spent on their change programme and how the budget is being controlled. The estimated cost has increased by two-thirds from 2013, yet FSCS thinks this is acceptable simply because it has saved money elsewhere. It isn’t.

“We believe the National Audit Office should conduct a value for money audit on FSCS’s strategic projects. We also want to see the FSCS commit to, at the very least, holding its costs steady for the next three years.”

APFA has also expressed concern that the cost of FOS on the advice industry keeps growing and is forecast to continue doing so, despite the number of cases falling dramatically.

Chris Hannant added:
“Both APFA and the National Audit Office have said previously that FOS needs to do more to communicate to members how and why costs keep increasing. It’s disappointing therefore that there is still a lack of detail about what is driving the change in unit costs.

“FOS should commit to greater transparency around what it is spending the levy on, and then adopt a more analytical approach to identify in monetary terms the main drivers of change in the unit costs. Only then will advisers know if they are getting value for money.”

To read APFA’s response to the FSCS scheme plan and budget 2015/16, please click here.

To read APFA’s response to the FOS plan and budget 2015/16, please click here.