Aifa has called on the Financial Services Compensation Scheme to consult on how money recouped from Norwich & Peterborough Building Society paid to Keydata investors should be refunded to FSCS levy payers.
N&P announced earlier this week that it has set aside £57m to pay redress to customers who invested in Keydata products through the society. This fund will also repay the FSCS for compensation it has already paid to N&P Keydata investors.
The FSCS says this may have implications for firms who have paid the interim levy, which was raised mainly to cover the cost of compensation to investors in Keydata unit Lifemark.
In January the FSCS announced an interim levy of £326m, with advisers paying £93m and fund managers £233m. The adviser levy includes FSCS compensation costs of £86m to compensate Lifemark investors.
Aifa director general Stephen Gay (pictured) says N&P’s decision to repay the FSCS is in line with the principle of ‘the polluter pays.’
But he says: “Whilst the rules are clear that this money should reduce the levy on the industry we believe it is ambiguous at present as to how this refund should be allocated.
“We are therefore calling on the FSCS to formally consult on how and to whom this money should be refunded. Advisers have been hit extremely hard by the recent levy. The FSCS has an opportunity to ease the burden on firms.”
Gay adds that the uncertainty around which firms should receive a refund for their interim levy payment highlights the need for root and branch FSCS reform.