Financial levies and compensation bills have combined to dampen the morale of UK financial advisers, Liz Field has claimed.
Speaking on the latest FTAdviser In Focus Fireside Chat, the chief executive of the Personal Investment Management and Financial Advice association said while advisers have shown resilience during Covid, their morale is lower than ever thanks to regulatory costs.
Pimfa, which runs a series of forums throughout the year, has seen a clear focus on mental health and well-being, not just for clients but the advisers themselves.
This has been a core theme throughout the pandemic, Field said, and she said she expected it to continue as businesses continue to "put people before profit" during the pandemic.
"Our industry can hold its head up and say we did indeed provide financial and mental wellbeing for our clients. That's what we have been doing, and what we will continue to do", she said.
However, Field said the ability of an adviser to pursue this course also relied on external factors, not least the rising cost of operating in a regulated environment.
Referring to the latest Financial Services Compensation Scheme levy hike, which was announced earlier this year, Field said: "The nature of an adviser's role is to be there through thick and thin, but the work involved in this is tremendous.
"And morale is very low, not just because of the size of the FSCS bill but if ever there were a sign that this was a broken system, this is indeed a reflection of that. It has failed consumers."
For every consumer that falls backon the FSCS, she said, the industry has to pick up the bill.
Field told FTAdviser In Focus: "If you look at the realities of what that means for firms, some small firms have told me their FSCS bill is three times what they pay for the Financial Conduct Authority fees.
"Some larger firms are having to swallow a £2m bill or more that has landed on their doormat. Morale generally is low.
"It is a broken system and something needs to be done about this."
She referred to the trade body's recent policy paper - 'Future of Advice' - which was published in February.
In this document, Pimfa made 12 recommendations it hoped would bring about "fundamental reform of, and wider consumer access to, professional financial and investment advice" in the UK.
Among these were proposals to tighten the regulatory framework to protect consumers better, so that claims do not end up at the FSCS in the first place, and therefore the bill does not need to be picked up by the rest of the good advisers out there, Field explained.
To watch the full fireside chat, click on the image above.
