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Advisers hit out at FSCS over interim levy bills

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.


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There are 11 comments at the moment, we would love to hear your opinion too.

  1. The financial services industry has raped and pilaged its clients for over 50 years. Is it any wonder that we now have the regulatory system we have? Someone has to pay for all the greed and incompetance it’s just frustrating that it has to be us. As Martin said it’s unlikely that anything we say will ever change anything so we’re just focussing on our clients needs which generates fees, some of which we waste on regulatory fees and FSCS levies. We view this as necessary subscription fee to retain the priviledge of looking after peoples money.

  2. Derek Bradley ceo PanaceaIFA 27th March 2012 at 4:34 pm

    The polluter should pay but the polluter generally has one “go” at serious pollution and then goes out of business leaving those still standing to pick up the tab.

    With retrospective regulation comes the possibility that the “greenest” of advice process today is the toxic mess to clear up tomorrow.

    The funding model is a mess, there needs to be a real vision applied that involves licensing of products together with an ideally a consumer and industry funded product levy. Unpalatable maybe, but it is always the consumer who will pay in the end by way of increased fees, this way you simply cut out the middleman, lower the cost of redress management and pave the way for the consumer nirvana that is payment of claims without investigating validity.

  3. david frankland 27th March 2012 at 4:40 pm

    Yorksheer justice…..
    Child – it wasn’t me Mum ….
    Mum – don’t answer back
    Child – I din’t do it Mum
    ( Clatter )
    Mum – No but you were there….
    Child – Oh no I wasn’t….
    ( Clatter )
    Mum – well thats one for any you got away with
    Child – Its not fair….
    ( Clatter )
    Mum – Its not a fair world lad……( + Clatter )
    Child…………….no response…..

    Thats how you work out the FSCS compensation scheme…..

  4. Reading all this wonderful news about how well these fantastic regulators are doing. How under the recent and current regulators they have managed to turn the UK from a steady, safe, “Savings” culture to one where everyone gets into debt and takes silly risks with other people’s money, I’m almost quite sorry that I escaped from working in “Regulated Financial Services” and sought a better life with more sanity. I sincerely hope that all you hard-working boys and girls, slaving away to earn enough to continue to pay for the Ivory Tower Extension Fund carry on until the fees force you to stop as they eventually exceed your gross earnings – because if you all did the sensible thing and got out of the business, it would reduce the opportunities for people like me in the more sane environment away from IFA work . . . . . having said that, perhaps if everyone simply said “NO” and quit, “They” would have to re-think ! . . . . . Whatever the future is for advisers, the general public seem destined to a serious lack of help and impartial advice as the regulators make it less and less possible to give that service. Surely the exact opposite from what they are supposed to be doing – or am I confused about that ? Philip Curnow. Ex-IFA and now Photographer, Journalist and Tutor . . . . and more relaxed and less stressed !

  5. Perhaps if the Government paid to protect the public, as they should, they might be more interested in coming up with a solution to funding, perhaps even some form of product levy. The current situation as I see it is that the Govt, FSA et al, are more than happy with the current system, as it costs them nothing and there is therefore no interest in changing it.

    What infuriates me the most is that we (generally) are not even paying for IFA problems in the main, as we all know KeyData were a product provider, the FSA were (largely) to blame for Arch Cru – but seem to have let Capita off the hook – and Wills & Co are stockbrokers. Can anyone remember when I agreed to bale out ex-stockbroker clients?

    If all refused to pay, could the FSA put everyone out of business? I don’t think so! The JYST SAY NO CAMPAIGN STARTS NOW!!!!

  7. Why don’t we strike for a day. Stage a protest and engender some media interest in our cause?

  8. Extend adviser charging to protection and then charge a fixed percentage for FSA fees and levies say 2% which is fully disclosed to the client. Then the client can see what the FSA costs him. Collection may be a problem but not insurmountable. Afterall, IPT is collected.

  9. Now that the FSCS as proposed are looking to pay out without investigation, (when it wouldn’t be financially viable to spend the time) I can see a further rash of claims over which we have no control. A perfect feeding ground for the claim factories once more.

    Sad is how I feel.

    I have a sudden urge to see if Sants et al any notifiable interests in such firms, (LOL).

  10. Stephen: “What infuriates me the most is that we (generally) are not even paying for IFA problems in the main, as we all know KeyData were a product provider, the FSA were (largely) to blame for Arch Cru – but seem to have let Capita off the hook – and Wills & Co are stockbrokers. Can anyone remember when I agreed to bale out ex-stockbroker clients?”

    Quite. I could not have put that better myself.

  11. The FSA and government have been largely responsible for the failures mentioned here – but they will never be held to account.

    The regulatory and compliance monsters are now so huge and so entrenched in UK financial services, and the self-interest of these monsters is so out of control that the industry is doomed. It’s just a matter of time before most IFAs are put out of business.

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