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Advisers call for more time to plan for FSCS bills

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Advisers say they are not being given enough time to plan for additional Financial Services Compensation Scheme levies.

The FSCS handed investment advisers a refund of £50m this week while warning an additional £36m will be levied on life and pensions advisers because of an ongoing influx of Sipp-related claims.

The annual levy on life and pensions advisers for 2016/17 was already set at £90m. This means that of the additional £36m, only £10m will be paid by that group and the remaining £26m will be shared across the other funding classes because breaking the £100m annual limit triggers a cross-subsidy.

Aspect8 financial planner Claire Walsh says the way the levies are announced makes it difficult for advisers to plan. She says: “There is not much forewarning in terms of a timeframe of when they happen. It feels like it is completely out of our hands in terms of how it will impact and how much it will cost.”

In its 2017/18 plan and budget released this week, the FSCS also warned providers they may have to meet the cost of future claims where they have accepted Sipp business from unauthorised introducers.

Page Russell director Tim Page says: “It will hasten a trend towards plain vanilla Sipps on one end of the spectrum and very expensive, niche full Sipps at the other.”

Read FSCS chief executive Mark Neale’s blog on the new plan and budget here.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Fed up of dodgy sales 18th January 2017 at 3:49 pm

    Please, please get the advisers that create the mess through mass dodgy sales (non standard investments) to pay using their assets (millions) even after they have left their companies behind.

  2. Nicholas Pleasure 18th January 2017 at 4:34 pm

    @Fed up of dodgy sales…Whilst I have every sympathy, I think you need to be careful what you wish for. Remember that when the FCA authorise something that they shouldn’t have done they like to blame the adviser. Just imagine if the vanilla products that I (and I suspect you) recommend turned out to be the victim of a fraud. Instantly the FCA would reclassify them as high risk and then blame us as advisers for not doing our due diligence.

    Would you really want to lose your house in this situation?

    Limited liability is the advisers best friend. Without it I, and I suspect most others would close tomorrow.

    The problem is that whilst the FCA is highly efficient at blaming others, it isn’t actually very good at regulating anything other than the font size on a client agreement. They really are the equivalent of taking £0.5bn a year of client money and flushing it straight down the toilet.

  3. You can see what was happening a mile off.

    I reported one to the police, FCA a few weeks back. Explained how it was working. They were not remotely interested.

  4. Given that the neither the FSCS or even the FCA (because of its useless time- and money-wasting GABRIEL system) have any idea as to the quantum of uninsured liabilities in respect of unregulated investments which have yet to fail, it’s hard to imagine how the former could give any more notice than it already does. Within just a few months of the latest motorway pile-up being announced, another follows.

    The root of the problem is regulatory failure to identify who’s selling what (toxic junk), establish whether or not the firms in question have proper PII cover and, where appropriate, to act swiftly to put a stop to such activities. Yet who is ever held to account? The regulator continually fails to fulfil its statutory responsibilities yet it’s always the (mostly innocent) adviser community which is forced to foot the bill.

    Unless and until the FCA takes firm and unequivocal steps to put its own house in order and rein in the amount of uninsured liabilities being taken on by the FSCS, all this talk about ways of reducing the endlessly increasing burden of the FSCS on the adviser community mean nothing.

  5. This is now out of control something needs to be done for sake of future advice in this country .There will be no Independent advice sector ,!!!!! If the FCA were a private business they would have been bankrupt long ago Honest hard working small ifa firms paying the cost of mess left behind buy cowboy company’s because the regulator persecutes them and doesn’t Regulate the later.

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