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Advisers back providers paying more towards FSCS

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Three quarters of advisers want life and pension providers and platforms to pay more towards Financial Compensation Scheme levies, Aegon research has found.

The survey of 150 advisers from Aegon’s advisory panel also finds 67 per cent of advisers want fund managers to contribute more for claims linked to investments.

The poll shows 63 per cent of those surveyed consider the current approach to FSCS levies is unfair.

It shows advisers are in favour of a risk-based solution with 81 per cent advocating this approach.

More than 90 per cent of those surveyed said firms involved with riskier products should pay a higher share of levies.

This puts them at odds with adviser trade body Libertatem, which has said it is opposed to risk-rating IFA firms.

Providers take on the FCA

In its December consultation on FSCS funding, the FCA said product provider contributions could increasingly fund the lifeboat scheme.

However, a senior FCA source tells Money Marketing the proposal “went down like a lead balloon” with providers.

Money Marketing understands that a further meeting involving the regulator and the Association of British Insurers took place recently in which the provider trade body again voiced its concerns over paying more towards the FSCS.

At the time of the consultation being published, the ABI criticised the proposal but other providers including Aegon, which is not a member of the ABI, supported sharing the burden of FSCS bills.

Aegon chief distribution and marketing officer Mark Till says: “Aegon believes the FSCS scheme delivers benefits to all players in the market by increasing consumer protections and confidence. This is why we believe both providers and fund managers should pay a greater share of the overall levy bill.”

Till says Aegon will include the survey findings in its response to the FCA consultation.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. This whole FSCS funding malarky is very missleading……

    Its the consumer who ultimately pays…… go and explain and ask any of your clients if they think this “tax” is fair !

    All we are, advisers and providers alike are the collectors

  2. FSCS here we come... 28th March 2017 at 11:52 am

    We need those facilitating the bad advice to be paying the FSCS fees or it doesn’t stop. The moral hazard in the current system rewards the bad guys.

    A SIPP trustee who has permitted an investment in Harlequin for example, can hardly claim they have no responsibility if the member has lost their entire savings. Many SIPP operators have not allowed this type of investment because this was not an appropriate investment for retirement savings. Especially not 100% of the fund. Yet these investments have been made to the tune of hundreds of millions of pounds.

    A limited company with very little capital, no PI Insurance after the collapse is easy to walk away from. In a lot of cases the Registered Individuals who worked at the failed firms are trading elsewhere.

    In the pre 2006 days these investments rarely proceeded when HMRC issued a permitted list.

    If the SIPP operators & SSAS Scheme Administrators have regulatory responsibility for the investments they permit it could also focus the mind a bit more.

    I fail to understand how HMRC, DWP, the Treasury, FCA et al can structure a system that makes it so easy for individuals to be conned out of their pension savings. This is not just their money, this is Tax Relieved savings that the taxpayer has a share in.

    More regulation or higher capital costs, more appropriate insurance and higher FSCS contributions for those permitting esoteric investments.

    Or maybe just back to the good old days when pension saving and tax relief from us taxpayers meant a restricted choice of investments.

    • For “those facilitating the bad advice to be paying [commensurately higher] FSCS fees”, the FCA needs to do three things:-

      1. Admit that its GABRIEL system is woefully unfit for purpose in that it doesn’t gather even the right regulatory information, let alone better regulatory information. Or, if it does gather the right information, that it’s not acted upon.

      2. Completely revamp said system so that it does so (and remove the requirement for the submission of so much patently spurious data). One has to wonder why APFA (as far as we know) is making no efforts in this direction.

      3. Commit to identifying and acting upon data revealing which firms are selling high risk toxic junk, not least demanding immediate proof of adequate PII cover for such activities, and taking swift and decisive action against those that don’t (which, I suspect, is most of them).

      How likely do you think the FCA is to do any of these things? And, if not, why not?

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