Investment advisers face £40m FSCS levy
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The Financial Services Compensation Scheme has announced that financial services firms face a total levy bill of £240m for 2011/12, with investment intermediaries accounting for about £40m.
This comes on top off of the £93m interim levy on advisers for 2010/11, mainly to cover the cost of failed Keydata unit Lifemark.
The annual levy for the investment intermediation sub-class is up from £20.3m last year.
Total levies for 2011/12 have fallen compared to the levy total for 2010/11 of £474m.
For the life and pensions intermediation sub-class, the levy has gone from £9.6m last year to an indicative levy of £10.5m.
The levy for general insurance intermediation has shot up from £59.6m to an indicative levy of £93.5m for 2011/12.
Most IFAs will fall under both investment intermediation and general insurance intermediation sub-classes, depending on the make-up of the business they write.
The FSCS predicts that claims relating to payment protection insurance are likely to increase to about 20,000 in the coming year.
It believes that high-profile investment failures, such as Keydata, are likely to fall away to a total of about 2,500 claims.
FSCS chief executive Mark Neale says: “We have discussed our estimates for the coming financial year with all the trade organisations and listened to industry concerns about the costs of protecting consumers.
“We always welcome a healthy debate about our work and encourage the industry to play a constructive role in the FSA’s consultation on our future funding. At the same time, we have a duty to compensate people with eligible claims. This helps to build consumer confidence and contributes to financial stability.
“Our indicative levy for 2011/12 reflects our commitment to providing the best possible service to consumers and the industry.”
The FSCS says a further levy will be announced in the summer to cover interest on Treasury loans made to support the failed institutions Bradford & Bingley, Heritable Bank, and Kaupthing Singer & Friedlander.
The FSCS says it is currently working out a repayment schedule with the Treasury, and once this is agreed will inform the industry as to when levies are due, how much they will be and on which class or sub-class they will fall.
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Readers' comments (13)
Anonymous | 2 Feb 2011 5:24 pm
Crikey, all that money needed by the FSCS (in addition to what the banks have to pay). Looks like a lot of people failed by regulation. Now to be paid for by those who are doing the right thing, or their clients anyway.........
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Dominic Thomas | 2 Feb 2011 5:39 pm
Perhaps the FSCS could you give me another 28 seconds to pay for it!
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Anonymous | 2 Feb 2011 5:51 pm
Armageddon ?
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Anonymous | 2 Feb 2011 5:56 pm
Looks like the FSA are really failing in their ability to regulate will all these levies and fees against failure. Just what have they been doing. If they had been doing their jobs properly, no-one would have failed and no investor etc would have lost monies, no-one would have been given bad advice. I think that the FSA should be judged by how much compensation is paid out. Oh, and it should be apportioned to Banks & IFAs, just so we know who they are failing to regulate properly.
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Anonymous | 2 Feb 2011 6:02 pm
We cannot go on like this or we will all be out of business.
We are subject to an unaccountable oppressive regime.
Lets take a leaf out of the Egyptians book.
March on Canary Wharf and PROTEST.
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Paul Bryanton | 2 Feb 2011 6:03 pm
Why don't the executives at the FSA pay it? after all, they presided over the regulation of the failed firms!!! Oh sorry I forgot, they were asleep on the job again!!!!
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Mr Fisher | 3 Feb 2011 7:48 am
Failing Somnolent Authority
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Cynical | 3 Feb 2011 9:12 am
Why do we have a regulatory regime that is more reactive than proactive to wrongful advice? Why do IFA firms have to pay for wrongful advice they have not given? Why is the emphasis on protecting the majority of the public from wrongful advice when they are not affected by wrongful advice? By all means recompense the minority of the general public who have suffered wrongful advice but why not simply penalise the perpetrators of this wrongful advice? Answer we need a regulatory authority that is answerable to parliament and a governing body that is better represented by qualified financial advisers.
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pec | 3 Feb 2011 9:23 am
Where may I ask is the perpetrators Professional
Indemnity cover in all this?
Surely it's simple enough for the PI provider to notify the authorities immediately if cover lapses and for them to act swiftly and accordingly.
Oh sorry my mistake.....'swiftly' does not feature in their domain, more like, shutting the door after the jolly old horse has bolted.
Fit for purpose, I think not!
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DH | 3 Feb 2011 10:20 am
93 million here, 40 million there, oh not forgetting the 474 million in the corner, 20.3 million under the sofa,
I love the comment from Mark Neale is he saying, many thanks for the trade organisations for popping along and we have listened to your view but tough luck your people have got to pay or the T O 's just sat around enjoying the tea and biccies agreeing to it all.
I would love to be a fly on the wall
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