Cap Financial Advice Fees Dropped

Cap Financial Advice Fees Dropped.

The EU Economic and Monetary Affairs Committee has dropped a motion to cap fees charged by financial advisers.

The proposal from Europe suggested that the maximum hourly rate that a financial adviser across Europe should be capped at €200 per hour.  At today's rate that would have meant a cap in the UK for financial advice fees of £166 per hour.

The move to cap financial advice fees was dropped amid intense lobbying from many sides and eventually MEPs agreed and have dropped the move.

The move was dropped citing that some salary based bank and insurance company salespeople may have an advantage over fee only advisers as they would appear to not be charging despite heavy charges within the policies, plans, investments and pensions they sell.

Comment
We actually think financial advice fees should be capped and a directive issued by the EU and if not the UK should take up the baton.

In the legal profession, the local courts set the maximum that solicitors can charge in a geographical area.  In short, maximum rates are set and as you expect, the closer you are to the centre of a major city, the greater the maximum rate is.  This works perfectly well, so we see no reason with the financial advice industry could not have a set maximum fee.

For example, the benchmarks could be set geographically or according to qualification level or according the complexity and risk of the type of advice being arranged.  Whether the adviser is from a bank or independent, the position is the same.  It may even be that charges levied by a restricted bank adviser should be even lower given that they may not be considering or advising on the whole of the market.