Aifa has hailed the FSA’s decision to press ahead with the proposed reforms of the Financial Services Compensation Scheme in the face of opposition from insurers and banks.
The reforms, which were agreed at the FSA’s latest board meeting, will see costs spread more evenly across the financial services industry and could result in fees halving for some advisers.
Advisers currently meet £42m of the total FSCS bill of £104.6m, plus some advisers also pay into the pension levy.
The average adviser pays £1,200 a year, which is higher than both the annual FSA and Financial Ombudsman Service fee.
Aifa director general Chris Cummings says spreading the bill across the industry is a much fairer option because banks, insurers and advisers benefit mutually.
He says: “The FSCS is a vital regulatory safety net but is in need of urgent reform if it is to continue to deliver its objectives. We are extremely pleased that they are pressing ahead with reform despite opposition from certain sections of the industry. We will soon have a fairer and more robust compensation scheme which will benefit consumers and the industry.”
Aifa has been campaigning for the FSA to review the funding of the FSCS for the past two years. Cummings says it has seen fierce opposition from banks and the Association of British Insurers which have been pressing to keep the existing scheme.
Cummings says: “We hope that the FSA will implement these reforms at the earliest opportunity. From the initial figures that were set out in the review, many IFAs could see the current FSCS bill of £1,200 per head fall by around 50 per cent.”