Aifa says pay FSCS levy and hope for refund
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Aifa is advising IFAs to pay the Financial Services Compensation Scheme £80m interim levy with the hope that payments will be rebated if the decision is overturned through a legal challenge.
The trade body says it is taking further legal advice on the merits of challenging the interim levy placed on investment intermediaries for the failures of Keydata, two stockbrokers and Lehman-backed structured product providers. But it says payments should be made as they become due at the end of April as the levy is a regulatory fee.
Aifa says the maximum cost for an adviser with 100 per cent investment business is £1,335. Firms with one adviser and a business split of 20 per centinvestment/80 per cent life and pensions will pay around £267, rising to £1,602 for six advisers and the same split.
Firms with one adviser and 50 per cent investment/50 per cent life and pensions will pay £667, rising to £4,005 for firms with six advisers. Advisers can use the Premium Credit instalment arrangement to spread the cost of the fees.
Law firm Regulatory Legal has received around 300 commitments of support to launch a judicial review against the levy but says it may require 1,000.
Partner Gareth Fatchett says: “It is about laying down a marker that IFAs will not accept anything foisted on to them.”
Speaking to Money Marketing last week, director general Chris Cummings (pictured) said: “We are looking at two aspects. First, has the FSCS observed due process? It seems they have, which is unfortunate. The wider issue is in terms of a regulatory failure by the FSA to subject Keydata to sufficient authorisation checks and ongoing supervision - were they failing to portray themselves in a clear, fair and not misleading way? This is so obviously a bill the IFA community should not be paying and puts in doubt the operational legitimacy of the compensation scheme.”
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Readers' comments (22)
mcox | 7 Apr 2010 9:43 am
I just cant believe it! The regulators have clearly failed in their duty of care and IFAs are called to pay the compensation. A Rogues charter?
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Incompetent Regulators Awards Team | 7 Apr 2010 9:51 am
Come on Chris, Serve the FSCS a writ, stop faffing around!
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Evan Owen | 7 Apr 2010 10:00 am
I'm struggling to understand all this, who got you into this situation in the first place?
Of course the ultimate get out clause for the FSCS is to make an adjustment to future levies.
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Anonymous | 7 Apr 2010 10:01 am
Oh yes - I am walking down the street and I get mugged - Don't worry AIFA tell me to hope the mugger will come back and give me back my money - Hell and freezing over comes to mind !!
The Shambles that call themselves FSA/FSCS will not lose any sleep over the misery they have caused in the past and the future.
I think I have been too polite for too long and I am now really p****d off with this lot screwing us at every opportunity !!
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Anonymous | 7 Apr 2010 10:22 am
"hope for a refund"
hope is all you get with AIFA, action - NEVER!
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Anonymous | 7 Apr 2010 10:26 am
Once again AIFA not acting in the best interests of IFA's. This is the main reason why we have not joined AIFA. It's about time IFA's had a Union Body acting for our benefit. It appears AIFA, CII, FSA etc etc etc all seem to look after number one first and we are paying the cost yet again!!!
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Mike Fenwick | 7 Apr 2010 10:38 am
I post - neither in favour of nor against - those considering a Judicial Review, but it is important to understand, in advance, what such a Review does and does not accomplish.
Extracts:
Judicial review is a type of court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body.
In other words, judicial reviews are a challenge to the way in which a decision has been made, rather than the rights and wrongs of the conclusion reached.
It is not really concerned with the conclusions of that process and whether those were 'right', as long as the right procedures have been followed. The court will not substitute what it thinks is the 'correct' decision.
This may mean that the public body will be able to make the same decision again, so long as it does so in a lawful way.
From here:
http://www.judiciary.gov.uk/judgment_guidance/judicial_review/index.htm
Chris Cummings has also been given copies of my correspondence to the FSCS, correspondence which has been acknowldeged both by them with further copies being acknowledged by the FSA.
Again - I speak neither in favour nor against - what AIFA intend to do, but I believe there are other "fundamental issues" which need to be addressed, not just the two which seem to be on AIFA's agenda currently.
One example is "Regulatory Arbitrage".
In simple terms, who pays and who doesn't pay any levy as an "Investment Intermediary"?
Elsewhere in this paper, Tesco are reported as hoping to attain a 10% share of the market.
That is big by anyone's standards, but as I asked in another post - are they an intermediary? What is your answer?
More significantly, are they, and the likes of the Post Office or Sainsburys, on the lists of those who are being asked to pay the levy for Keydata or the like? Has anyone asked?
Imho - these are valid questions, ones which also require the interest, not just of the FSCS and the FSA, but also of the OFT on Competition grounds.
For the record - Both the FSA and FSCS are aware that I am preparing a series of reports, on this matter and others.
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Mike Jordan | 7 Apr 2010 10:46 am
Are Aifa meant to actually represent IFAs??? What a bunch of useless wimps!!!
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Philip Keeton | 7 Apr 2010 10:55 am
In other words pay up and shut up.
Here we go again whats the point of the AIFA too little too late.
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Chris | 7 Apr 2010 11:02 am
Should AIFA be advising us all to withhold payment of these fees and to unite as one body? We will never get a 'refund' once the FSCS has our money. Where will this stop, how many more investments co and banks went tits up that we have to pay for. As a sole trader I have had enough and there is nobody out there to help me.
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