Commenting, Andrew Strange, policy director of AIFA, said: "Although we welcome a reduced fee for the majority of IFAs, we must ensure there are better checks and balances in place under the new regulatory structure to prevent ever spiralling costs of regulation.
"We are pleased to see FSA again acknowledge a risk-based cost allocation approach. This must be extended to ensure that the IFA profession does not bear the cost of regulatory change introduced to tackle systemic risks posed by large institutions.
“In addition those IFA firms meeting the new regulatory requirements need less compliance and should therefore be rewarded through regulatory dividends.
"However, those IFA firms that hold client money will see an unjustified increase in their fees under the proposed structure. Despite holding client money this IFA model remains fundamentally low risk and should not be subject to such an increase in fees."