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Aifa calls for clarity over N&P FSCS refunds

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.   

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Speak AIFA speak. There’s a good boy. Some might say about time but I wonder how they can do this now when they claimed the fscs funding system as a victory a couple of years ago. How much are member contributions increasing this year Mr Gay?

  2. I know I’m going to be even less popular than usual for expressing this view, but:

    Shouldn’t the refund go pro rata to the ‘spillover’ investment management class? I don’t see why an intermediary should get a refund unless and until the FSCS liabilities for that class fall below the levy cap.

  3. Don’t be silly Adam. It is not possible for you to be LESS popular.

  4. Call me a simple soul, but isn’t it logical and fair that the amounts refunded should be directly proportionate to percentage by which the amount to be coughed up by N&P will offset the total sum for which the industry has been billed thus far?

    So, if N&P’s contribution represents 30% of the total, everybody else should receive a 30% refund. Or am I missing something here?

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