Hornbuckle Mitchell may pass costs of FSCS levy on to clients
Hornbuckle Mitchell director Mary Stewart admits the firm could be forced to pass on its £375,000 Financial Services Compensation Scheme interim levy to customers.
The Sipp provider, which saw its levy rocket from just £6,000 last year, is considering writing to its 14,000 Sipp clients to warn they could have to foot the bill.
Stewart says: “We are looking at all options at the moment. It was a huge shock and a bitter pill to swallow because we have not done anything wrong. We have to consider passing on the cost to our customers. The problem is that we do not know what the next levy will be, so if we decide to absorb this we will set a precedent.”
In February, James Hay wrote to customers, warning that it may have to pass the cost of its £938,000 levy on to consumers.
Chief executive Tim Sargisson says the company has now decided to absorb the costs following confirmation that the investment fund management sub-class liability is capped at £300m.
He says: “Our concern was that everything above the IFA sector’s £100m cap would spill over to the fund management sub-class. It is now clear we do not have an open-ended financial liability, so we can absorb the levy as a business expense.”
Suffolk Life, Hargreaves Lansdown and AJ Bell will also write off their FSCS payments as a business expense.
James Hay says the interim levy is based on a charge of around £250 per £10,000 of annual eligible income for the investment intermediary sub-class and £348 per £10,000 of annual eligible income for the investment fund management sub-class.