IFAs will only get 30 days to pay £70m FSCS bill
Share
Investment advisers will receive notice of their share of the £70m FSCS interim levy by the end of March and it will need to be paid in full within 30 days.
Source: Michael Walter/Troika
The interim levy will cover the failings of structured product provider Keydata and stockbrokers Pacific Continental and Square Mile. Keydata will cost advisers £43m, while Pacific Continental and Square Mile will cost £27m.
An FSCS spokeswoman says firms will be notified of their levy by March 31, 2010 and payment will be due within 30 days.
The investment intermediation sub-class has approximately 6,500 firms, which equates to an average payment of just over £10,000 per firm.
The spokeswoman says firms’ levies will depend on their size and the amount of business they write.
She says: “Smaller firms that write less business will pay a smaller levy. There is a fee calculator on the FSA website where firms can calculate their costs.”
IFAs are also likely to be hit hardest by an additional interim levy of £20m for claims made in respect of NDF Administration, Defined Returns and Arc Capital and Income.
The FSCS says it is currently consulting with the FSA and administrators to determine which sub-class pays but that it is likely to fall on investment advisers.
This would trigger a break in the £100m ceiling for the investment adviser sub-class with any overflows paid by the fund management sub-class.
Theses levies come on top of the £19m levy investment advisers will have to pay the FSCS for 2010/2011 and the £13.5m that life and pensions advisers will have to pay over the same period.
In contrast, the investment fund management sub-class will only be required to pay £3.5m, plus any overflows from the investment adviser sub-class. General insurance advisers are to be hit with a £20m levy to pay for PPI claims.
FSCS chief executive Loretta Minghella (pictured) also warns that more failures in the investment arena are likely to trigger further future costs.
She says: “In addition to these firms, we are continuing to see more failures coming to us in the investment area, and these are likely to impact further on our funding requirements later in the year.”
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
View results 10 per page | 20 per page | 50 per page
Readers' comments (40)
Fraser | 12 Feb 2010 12:44 pm
sorry,i'll decide when i have to pay it, if i was a politician i'd just claim it on expesnes.....
Unsuitable or offensive? Report this comment
Dave Hedge | 12 Feb 2010 12:49 pm
These cretins who set these fees and compensation rules have no idea of life in the real world have they?
Three defaulters are product providers and it the imbeciles at the FSA did their job correctly these products would not have been on general release.
The two stockbroking firms were using “reckless” and “dishonest” sales practices. and their mangement should be pursued through the courts for their assets.
Once again we are being made to pay for the incompatence of the FSA.
Unsuitable or offensive? Report this comment
Michael Fallas | 12 Feb 2010 12:56 pm
Why should IFA's pay this?
This was a "product" failure and also a "regulatory failure"
Why is no one disputing this levy?
Why is it the FSA does not pay for their errors ?
Banks fail and get bailed out by the taxpayers but an investment scheme fails and IFA's have to pick up the bill.
Just shows how nuts this industry and regulation is becoming.
Unsuitable or offensive? Report this comment
John Blackmore | 12 Feb 2010 1:11 pm
How those who run the FSCS and FSA can sleep at night is beyond me.
Give me a crook any day rather than an honest fool
Unsuitable or offensive? Report this comment
Evan Owen | 12 Feb 2010 1:19 pm
This is untenable it is not sustainable any more than FSA fees or levies announced shortly before they are due.
The regulator insist that firm must know their financial situation by the day, well yesterday many IFAs were fairly certain about their blance sheet, today they are not.
Why should innocent advisers be shelling out for what the crooks did and the regulator failed to do? Acts and ommissions!!
Unsuitable or offensive? Report this comment
Paul | 12 Feb 2010 1:22 pm
You cant even use the fee calculator on the FSA website to estimate this potential bill as they say it wont be ready till next week! Not leaving much time to "plan" for the outlay!
If the "average " of £10,000 is correct, then thats going to be a hefty amount even for a smaller firm. How can this make sense that its jsut down to us to pay, regardless. What if the default was £700 million - would we all get a £100,000 average bill?!...its crazy that the "system" in place could lead to all firms being put out of business if the default is large enough....not really a valid solution is it.
Unsuitable or offensive? Report this comment
Stuart Rathbone | 12 Feb 2010 1:36 pm
I think John Blackmore may be being a little generous in referring to the FSA & FSCS as honest fools.
Unsuitable or offensive? Report this comment
Mike Fitzgerald | 12 Feb 2010 1:42 pm
Once again its the innocent IFAs paying for both regulatory and producy failures
More IFAs wil leave the industry and there will be even less choice for consumers, who will then be pushed towards banks for their financial advice.The very organisations that caused the world wide recession-perhaps thats the overall plan
Unsuitable or offensive? Report this comment
Chris Parker | 12 Feb 2010 1:44 pm
Call me a cynic, but I do wonder how much these structured product providers owe to our esteemend banks? Are we simply helping to pay money back to the banks and ultimately our moronic government?
Unsuitable or offensive? Report this comment
Andrew Moore | 12 Feb 2010 1:56 pm
IFAs are weakly represented in the financial sector and as such an easy kicking block.
The only recourse we have to counter such obviously unfair practices is mass protest. If we all withold funds in unison someone might take notice.
In the end it is our innocent clients who have to pay. Fundamental change is urgently required to a system that has totally failed.
Unsuitable or offensive? Report this comment