New £40m levy looms over MF Global failure
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Advisers are facing a Financial Services Compensation Scheme annual levy of £33m for 2012/13 but could still be hit with a further interim levy of £40m in connection with MF Global.
The FSCS plan and budget for 2012/13 proposes a total annual levy of £221m, £33m of which will be paid by the investment intermediary sub-class. Last year, advisers paid an annual levy of £34m but were also billed for £93m through an interim levy mainly to cover compensation costs of the collapse of Keydata.
Fund companies, which paid £233m towards the interim levy last year, are not being levied through the annual levy this year as the FSCS does not expect any claims in the sub-class.
The 2012/13 annual levy covers expected compensation costs relating to Keydata, Wills & Co and Arch Cru but advisers could face a further interim levy of £40m before the end of March for failed investment brokerage MF Global.
The scheme warned in December compensation costs for Arch cru and MF Global could go above the £100m adviser sub-class and trigger a cross-subsidy for fund firms.
FSCS chief executive Mark Neale says: “None of our expense or levy estimates include any allowance for MF Global. We are working closely with the administrators KPMG and will keep all interested parties informed of developments.”
Evolve Financial Planning director Jason Witcombe says: “The existence of the FSCS benefits the profession but it is galling to have to keep paying for failed products that we did not go anywhere near.
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