View more on these topics

Advisers slam huge FSCS levy variations

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.”

Recommended

9

The FSA has failed to grasp the problem of low-risk products

Barclays’ £7.7m FSA fine is a punishment for weaknesses in its sales process. I expect these had more to do with the way it frames questions about risk tolerance and interprets the answers than its assessment of risk in the products it then matches customers to. But it is still striking that at least one […]

13

Investment advisers face £40m FSCS levy

The Financial Services Compensation Scheme has announced that financial services firms face a total levy bill of £240m for 2011/12, with investment intermediaries accounting for about £40m. This comes on top off of the £93m interim levy on advisers for 2010/11, mainly to cover the cost of failed Keydata unit Lifemark. The annual levy for […]

Stay east, Young man

There are a number of reasons I am a fan of Aberdeen’s emerging markets and Asia guru Hugh Young. For starters, I am pro anyone who spared the time to talk to me as I researched my book – and doubly so if they do so on the final morning of a week’s trip to […]

Why your clients need some tough love

In any relationship that matters, professional or personal, you should be upfront with someone if you think they’re making a decision or doing something they might later regret. Being honest with someone and having their best interests at heart, however hard the message, is key to building trust in any relationship. So how does this […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. The FSA decides how FSCS funding works.
    They consulted on the system.
    http://www.fsa.gov.uk/pubs/policy/ps08_11.pdf

Leave a comment