Advisers have branded the Financial Services Compensation Scheme’s decision to hit investment advisers with an interim levy of £29.5m as “desperately unfair”.
The FSCS said this week it expects to raise an interim levy of £29.5m on investment intermediaries before June 2014 as a result of the failures of life settlement firm Catalyst and stockbroker Fyshe Horton Finney, as well as increased compensation costs for Arch cru.
The FSCS says it expects costs relating to Catalyst to run into the tens of millions of pounds, and to span both the 2013/14 and 2014/15 levy years.
Other claims falling on the investment adviser class relate to Pritchard Stockbrokers, spreadbetting firm Worldspreads, and MF Global.
The FSCS has warned it may have to raise an interim levy on life and pensions advisers following the liquidation of former Harlequin Property distributor TailorMade Independent, but says costs are uncertain at this stage.
Pilot Financial Planning director Ian Thomas says: “This is desperately unfair. The advice industry is improving its professional standards and yet we are still picking up the tab for the sins of the past.
“I have no sense of connection to the businesses that created these issues.”
Apfa director general Chris Hannant says he is “disappointed” by the size of the levy.
He says: “This highlights the need for the FCA to look at the whole system for raising funds for compensation. Advice firms are under significant cost pressures and it is difficult for them to meet funding requests at short notice.”
Syndaxi Chartered Financial Planners managing director Robert Reid says: “The FSCS is taking the money off the wrong people. We are subsidising a bunch of failures.”