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Advisers face further Keydata levy

Advisers may face the prospect of another Financial Services Compensation Scheme levy in relation to Keydata claims.

FSCS levies are raised in April with funds coming into the scheme at the beginning of July, meaning that levies cover the yearly period to the end of June.

The FSCS says that depending on the levy amounts and the levels of compensation, refunds and recoveries by June 30, the intermediary sub-class may face a further interim levy if there is not enough money to pay Keydata claims as at the end of June.

An FSCS spokeswoman says: “We cannot say what will happen until June. There are a few elements at play – the amount that was levied, what was paid in compensation, what has been refunded and what is recovered.

“As we do not know the final figures for all those elements, it is too early to say if any extra funding would be required. We will know closer to the time.”

The FSCS announced an interim £326m industry levy in January, mainly to cover the cost of Keydata claims. Advisers had to pay £93m towards these costs and fund managers £233m.

Philip J Milton & Company managing director Philip Milton says: “The industry will be horrified to hear there may be another significant payment.”

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Comments

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

  1. Horrified? The understatement of the year I suspect. In all seriousness for a moment though, the real issue isn’t that we have to pay more it’s why was it allowed to happen and what steps are being taken to ensure it doesn’t happen again.

  2. I won’t be horrified. I have come to accept gross incompetence as normal when it comes to regulation.

  3. This is not fair.

  4. If you can’t stand the heat…….

  5. The concluding paragraphs in my article on this issue ended:

    “Should the FSCS be the sole arbiter in the exercise of what should be “your” legal rights? Do you really need the permission of the FSCS to recover the losses you have been asked to bear? Who pays the piper – who calls the tune?

    If ever there was a reason for both IFAs and investment managers to combine their talents and work together – it is over this issue of subrogation rights related to the Keydata affair. Not least because by doing so it may establish a precedent which influences how the eventual review of the FSCS is concluded.”

    From what I observe the IMA are active, not only in looking at the preservation of the life settlememt issues, but also in the recovery aspects.

    I may be wrong but I have ot seen similar activity from IFAs or their Trade bodies.

    Having a set date for accounting purposes on any levies seems to me to be pervrse, and the more so when in cases like Keydata the issue is still very much work in progress.

    I suspect the FSCS may well take that into account – and the fat lady is not yet on the stage – but are there any IFAs or their trade bodies actively arguing their case? The IMA are!

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