The Association of British Insurers has warned its life and pensions members they could soon face Financial Services Compensation Scheme levies if the FCA goes ahead with plans for providers to contribute for adviser failures.
The ABI regulation team recently met the FCA to talk about the FSCS funding review. An ABI note, seen by Money Marketing, says the FCA is considering merging the intermediary classes and having providers contribute automatically for intermediary failures.
The note says: “This responds to the FAMR report’s recommendation to reduce the size and volatility of the cost to intermediaries of their failures. Such an outcome would be disappointing, even though the FCA’s modelling suggests that the cost to insurers would not have been high had this new basis applied in recent years.”
It adds that life and pension providers would face FSCS compensation levies for the first time in “very many years”.
The FCA’s public consultation into how the FSCS is funded is expected in Q4.
Several meetings with trade bodies have taken place ahead of the consultation. A product-based levy was deemed out of scope of the review in early discussion despite Apfa and the Personal Finance Society favouring this option.