View more on these topics

Aifa legal threat as claims rocket

By James Salmon

Aifa has pledged to mount a legal challenge against the FSCS if it fails to prove it is acting within its jurisdiction in paying old pension review claims that would be thrown out under general law.

Compensation claims are more than double FSCS forecasts, with firms which were authorised by the PIA facing a predicted doubling of the levy from £25m in 2006/07 to £45m-50m over the next two years.

The FSCS says claims have rocketed as the combined weight of endowment misselling and pension review complaints have pushed many firms into default. This means that claims which were previously rejected because the firms were not in default have had to be reopened.

The Financial Services Compensation Scheme’s half-year report shows it has paid out 400 claims compared with forecasts in January of just 350 for the entire year.

It expects to pay 860 claims by the end of the financial year, with each payout worth on average £24,600.

The levy hike will affect levy block A16, created by the PIA for the pension review where 85 per cent of the liability is taken on by providers and 15 per cent by advisers.

The news comes as a shock after the FSCS claimed it would consign the pension review to history by the end of the year. It has prompted Aifa to consult its lawyers, which have written to the FSCS asking it to prove it is lawfully paying compensation for old claims.

Aifa believes that many of these pension review complaints are beyond the jurisdiction of the FSCS because the Limitation Act under general law renders complaints invalid 15 years after the advice was given. It also questions how the FSCS can revisit pension review claims from insolvent companies when the firms had already dealt with the review when solvent.

Cummings says: “The FSCS needs to prove it is not acting beyond its jurisdiction or we will mount a legal challenge. We are consulting our lawyers. This news has a potentially devastating impact on many IFAs who can never shake off their liability.”

An FSCS spokeswoman says: “We will not respond until we receive a formal approach. It is important to remember that these are predictions which are subject to change.

Split-cap levy on the way, p3


Restoring the public’s faith in MPPI

Whether you are an IFA, directly authorised firm or an appointed representative, selling mortgage payment protection insurance has certainly raised a few questions over recent months. Negative headlines in the press have done nothing to install confidence in either adviser or consumer when it comes to selling and buying MPPI. Although MPPI itself has not […]

Home guard

IFS head of faculty financial regulation and corporate & academic relationship management Mark Roberts says the FSA, brokers and lenders need to work together for a smooth transition to equity-release regulation next spring to build up consumer confidence

Lutine withdraws from the PTA market

Lutine has confirmed it is temporarily withdrawing from the pension term assurance market following the Government’s U-turn on tax relief.Liverpool Victoria and Scottish Provident are the only two providers left listed on the Exchange as selling PTA.Liv Vic has confirmed it will be making a statement later today.

Rayner Spencer Mills: Why we rate the Artemis Global Growth Fund

Ken Rayner and Graham O’Neill from RSM explain why they rate the fund, its investment process and how it can be used in a portfolio. The Artemis Global Growth Fund became a RSM ‘rated’ fund earlier this year. In this video, Ken Rayner and Graham O’Neill explain the fund’s investment approach, why they rate it, […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm