Advisers have slammed the Financial Services Compensation Scheme’s “complex and opaque” funding system after being hit with massive variations in their annual bills.
The interim levy on advisers has risen from £80m last year to £93m, although some advisers have reported huge increases and others have seen falls.
The FSCS has changed the way it calculates the levy from the number of registered individuals at a firm to the amount of eligible income that the firm generates.
Aifa says it believes advisers categorising all their platform business as investment could have contributed to some rises.
Philip J Milton & Company managing director Philip Milton has seen his bill rise from £6,009 to £51,459 – an increase of 756 per cent. He says: “Our increase is absolutely ludicrous.
What is galling is that the main thrust of our bill seems to be based on the management fees we charge for discretionary fund management.
“What on earth has the income from discretionary management got to do with the failure of Keydata? It just does not make any sense.”
Informed Choice saw its bill shoot up by 670 per cent from £1,300 to £10,012. The firm does not offer discretionary fund management services.
Managing director Martin Bamford says: “This is just another example of how the system for funding the FSCS has become so complex and opaque.”
Bamford says: “The big driving force behind our increase seems to be the change in calculation. Apparently, the FSCS consulted and communicated this change back in 2008 but I have yet to find an IFA who remembers this happening.”
But Mark Walker Financial Services principal Mark Walker says his bill has fallen from £1,000 to £500 following the switch. He says: “I have always thought eligible income was a much fairer way of calculating fees. That said, I still do not agree with having to pay the levy. It is a lot of money that some companies are being asked to find.”