Advisers have branded the current Financial Services Compensation Scheme funding model “hopeless” and hit out at having to pay for the “supreme idiocy” of others as they receive invoices for their share of the £60m interim levy on investment intermediaries.
The FSCS announced the £60m interim levy for 2011/12 earlier this month. Claims related to the collapse of MF Global are expected to account for almost £27m. The interim levy also covers claims relating to Keydata, CF Arch cru and Wills & Co.
Jacksons Wealth Management managing director Pete Matthew has seen his interim levy bill go up 46 per cent from £2,600 last year to £3,800.
He says: “There has got to be a levy system of some kind but the problem is with the grouping of firms. The investment intermediary sub-class is so broad that it cannot possibly be construed as fair. It is soul destroying when we get these bills.”
Informed Choice managing director Martin Bamford says his share of the interim levy has broadly stayed the same as last year at approximately £10,000.
He says: “This year I have almost gone past the point of being frustrated with the FSCS. Speaking to other advisers I just get an overwhelming sense of hopelessness about the whole thing. The regulatory structure has become so big and so lumbering that I do not see us forcing change at any stage.”
The FSA is to carry out a review of the FSCS funding model by the end of June. However Bamford is not convinced it will bring about real change.
Wishart Wealth director Iain Wishart says: “I am a firm believer in making the polluter pay. But it does not happen. Advisers that did not get involved with Keydata and Arch cru, which we did not, should not have to pay for the supreme idiocy that has gone on out there.”
The FSA has published proposals today to give the FSCS the power to pay full compensation earlier and without investigating whether a claim is valid as part of a shake-up of the rules that govern the compensation scheme. The consultation closes on June 26.