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Aifa says pay FSCS levy and hope for refund

Aifa is advising IFAs to pay the Financial Services Compensation Scheme £80m interim levy with the hope that payments will be rebated if the decision is overturned through a legal challenge.

The trade body says it is taking further legal advice on the merits of challenging the interim levy placed on investment intermediaries for the failures of Keydata, two stockbrokers and Lehman-backed structured product providers. But it says payments should be made as they become due at the end of April as the levy is a regulatory fee.

Aifa says the maximum cost for an adviser with 100 per cent investment business is £1,335. Firms with one adviser and a business split of 20 per centinvestment/80 per cent life and pensions will pay around £267, rising to £1,602 for six advisers and the same split.

Firms with one adviser and 50 per cent investment/50 per cent life and pensions will pay £667, rising to £4,005 for firms with six advisers. Advisers can use the Premium Credit instalment arrangement to spread the cost of the fees.

Law firm Regulatory Legal has received around 300 commitments of support to launch a judicial review against the levy but says it may require 1,000.
Partner Gareth Fatchett says: “It is about laying down a marker that IFAs will not accept anything foisted on to them.”

Speaking to Money Marketing last week, director general Chris Cummings (pictured) said: “We are looking at two aspects. First, has the FSCS observed due process? It seems they have, which is unfortunate. The wider issue is in terms of a regulatory failure by the FSA to subject Keydata to sufficient authorisation checks and ongoing supervision – were they failing to portray themselves in a clear, fair and not misleading way? This is so obviously a bill the IFA community should not be paying and puts in doubt the operational legitimacy of the compensation scheme.”


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There are 23 comments at the moment, we would love to hear your opinion too.

  1. I just cant believe it! The regulators have clearly failed in their duty of care and IFAs are called to pay the compensation. A Rogues charter?

  2. Incompetent Regulators Awards Team 7th April 2010 at 9:51 am

    Come on Chris, Serve the FSCS a writ, stop faffing around!

  3. I’m struggling to understand all this, who got you into this situation in the first place?

    Of course the ultimate get out clause for the FSCS is to make an adjustment to future levies.

  4. Oh yes – I am walking down the street and I get mugged – Don’t worry AIFA tell me to hope the mugger will come back and give me back my money – Hell and freezing over comes to mind !!

    The Shambles that call themselves FSA/FSCS will not lose any sleep over the misery they have caused in the past and the future.

    I think I have been too polite for too long and I am now really p****d off with this lot screwing us at every opportunity !!

  5. “hope for a refund”

    hope is all you get with AIFA, action – NEVER!

  6. Once again AIFA not acting in the best interests of IFA’s. This is the main reason why we have not joined AIFA. It’s about time IFA’s had a Union Body acting for our benefit. It appears AIFA, CII, FSA etc etc etc all seem to look after number one first and we are paying the cost yet again!!!

  7. I post – neither in favour of nor against – those considering a Judicial Review, but it is important to understand, in advance, what such a Review does and does not accomplish.


    Judicial review is a type of court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body.

    In other words, judicial reviews are a challenge to the way in which a decision has been made, rather than the rights and wrongs of the conclusion reached.

    It is not really concerned with the conclusions of that process and whether those were ‘right’, as long as the right procedures have been followed. The court will not substitute what it thinks is the ‘correct’ decision.

    This may mean that the public body will be able to make the same decision again, so long as it does so in a lawful way.

    From here:

    Chris Cummings has also been given copies of my correspondence to the FSCS, correspondence which has been acknowldeged both by them with further copies being acknowledged by the FSA.

    Again – I speak neither in favour nor against – what AIFA intend to do, but I believe there are other “fundamental issues” which need to be addressed, not just the two which seem to be on AIFA’s agenda currently.

    One example is “Regulatory Arbitrage”.

    In simple terms, who pays and who doesn’t pay any levy as an “Investment Intermediary”?

    Elsewhere in this paper, Tesco are reported as hoping to attain a 10% shae of the market.

    That is big by anyone’s standards, but as I asked in another post – are they an intermediary? What is your answer?

    More significantly, are they, and the likes of the Post Office or Sainsburys, on the lists of those who are being asked to pay the levy for Keydata or the like? Has anyone asked?

    Imho – these are valid questions, ones which also require the interest, not just of the FSCS and the FSA, but also of the OFT on Competition grounds.

    For the record – Both the FSA and FSCS are aware that I am preparing a series of reports, on this matter and others.

  8. Are Aifa meant to actually represent IFAs??? What a bunch of useless wimps!!!

  9. In other words pay up and shut up.

    Here we go again whats the point of the AIFA too little too late.

  10. Should AIFA be advising us all to withhold payment of these fees and to unite as one body? We will never get a ‘refund’ once the FSCS has our money. Where will this stop, how many more investments co and banks went tits up that we have to pay for. As a sole trader I have had enough and there is nobody out there to help me.

  11. Dear advisers

    The last ‘review’ of the FSCS failed to address ‘these difficult issues of fairness’ as the FSA describes the current situation. There is another FSCS review on the cards and that is the only opportunity you will have which will make any difference, any legal action will not turn the clock back and you will still have to pay the FSA/FSCS bill which will include the costs of the defence of your challenge, this I have learned at personal cost.

    It is clear that past representation has failed you because you yourselves have failed to partake in any discussions in a reasonable fashion and more importantly have failed to financially support those who want to help, the IFA Defence Union is a prime example.

    Attacking those who you view as your tormentors on these blogs is futile, particularly when it is unintelligible. That is what got me into trouble in the past, listening to the irrational element.

    So, you can’t change what has been done but you can ensure that you are represented properly in future, if there is one.

  12. I allowed my aifa subscription to lapse as I felt they were a waste of money.

  13. Mike Fenwick – brilliantly said.

    Others – why are you attacking AIFA for stating the obvious? Are you that dumb not to realise that they can’t say anything else?

    What they have said is right – pay the levy, or simply get de authorised.

    Is it any wonder that the public think so little of this profession when you get people having a go at a body which is trying (ok not hard enough) to get a reasonable answer?

    Just read Mike’s comments and see whether you would have said anything different if you were in Chris’ shoes?

    It is an unfair charge and only those who sold such products should be held accountable, along with the FSA for again failing to do its duty.

  14. “hope for a refund”

    hope is all you get with AIFA, action – NEVER!

  15. Unless or until AIFA grasp the nettle and initiate a legal action against the FSCS, everything from Chris Cummings is just piss and wind.

    Then again, AIFA needs to be sure of its ground before steaming into a battle that it might not be very likely to win, hence the reference to “further legal advice” being taken. But when is AIFA are going to stop paying lawyers for advice and start paying them for action?

    Oh yes, as usual, I commend readers to download and read thoroughly, from which you may draw your own conclusions as to the way in which regulation works in this country.

  16. I have just received FSCS levy for £2,403.59
    With one adviser (myself), with business split as follows: Business split – Investments 75% // Pensions 24% life business 1%(if atall)

    I have queried this levy, but meantime, can anyone explain to me why I my fee is so high? AB

  17. Robert Donaldson 7th April 2010 at 3:50 pm

    The problem with AIFA is that it wants to be friends with everybody but the enemy of no one. You can’t bat for both sides and it is about time you got off the fence. You are doing the association no good and the industyr little better.

    We are taking further legal advice. How long will it take we are being asked to pay the bills in the next 21 days.

  18. Mis-sold investor 7th April 2010 at 5:41 pm

    …and in the meanwhile, the people who are really suffering from the collapse of these Lehman-backed products are kept waiting for a compensation decision by FSCS, presumably delayed because of the political pressure from financial intermediaries. There is also an action group run by these investors pressing for a decision from FSCS

  19. I agree with the comment to refuse to pay the levy. It would be hard at the very least to get it back. Isn’t it about time we said enough is enough. We are portrayed as the bad guys in everything that happens. Suppose we may as well hold our hands up to Man U being beaten last night as well, and contribute to their loss of revenue from the Champions League !!!

  20. Spot On Evan Owen !

    Adviser apathy is the FSA’s best weapon and even now it is STILL the single biggest obsticle to proper representation that could actually make a difference.

    The number of truly p+ssed off IFAs now is astonishing yet most do nothing and that is the reason why we have what we have.

    Proper representation that stands up and is counted is the only way IFAs have a hope in hell of making their views count in the future I am afraid its not AIFA !

  21. I have queried direct with the FSCS this morning my Levy as it appears to be out of line with the figures quoted by AIFA. Their freephone number for interested parties is 0800 678 1100 and can be contacted on
    Good Luck, AB

  22. Perhaps the problem is AIFA itself, its ‘purpose’ and its politics?

    Every other industry sector has trade bodies which have more clout simply because they have more money and forceful lobbying, take the fund managers for example, look what they managed to do regarding Keydata, if what I hear is true that is.

    The small firms in investments, insurance and mortgages are unable to compete, over the years I have had many people claim that NFIFA was neutered and that AIFA became what it is today, bumbed down by politics, I have no idea if that is true but it might explain a lot of things.

    If you look at the Council of AIFA you might wonder how constitutionally representative it is of small firms. The networks appear to rule the roost, I may be wrong but it really does seem that many of the things said and done meet the needs to those who will benefit at either end of the market post RDR, there may not be much in between, I may be wrong there too but I wasn’t wrong about many ‘trends’ over the last 25 years…I have been wrong about the ability of IFAs to stick together and that will publicly declared, written in stone, polished granite if my family can afford it.

  23. FSCS Levy, TCF,RDR the list go’s on. I think I would be rodgered less in broadmoor. And it would cost less too !!!

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