Compensation cross-subsidy to continue
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The Financial Services Compensation Scheme will continue to be funded through cross-sub- sidies under the new regulatory structure.
The new Financial Conduct Authority and the Prudential Regulation Authority will both raise levies to pay for the FSCS.
The FSA is currently respon- sible for raising levies to fund the FSCS, the Consumer Financial Education Body, and the Financial Ombudsman Service.
Under the new structure, the FCA will continue to raise levies for the FOS and CFEB.
The Treasury says: “In relation to the FSCS, both authorities will have the power to make rules, albeit only in relation to the sub-schemes for which they have responsibility, and therefore raise levies. It is expected, however, that while the PRA will levy its own fees, a non-statutory arrangement will be put in place for the collection of fees through one organisation, similar to that which currently exists in relation to the collection of the FSCS levy by the FSA.”
Last July when the Treasury first proposed regulatory reform it was suggested that separate schemes could be set up to cover conduct regulation and prudential regulation. This could have meant the end of the current cross-subsidy system.
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