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Anger grows as providers stand firm on levy aid

Anger is mounting among over the end of the product provider subsidy of the Financial Services Compensation Scheme levy through Pass.

It was recently revealed that providers are unlikely to continue the subsidy at the close of this year but IFAs say it should continue as it is the providers&#39 products which cause compensation claims.

Master Adviser managing director Doug Brodie says providers can easily see if a product is being sold indiscriminately by brokers but they do nothing about it.

He says compensation claims stem from problems with products created by providers and sold by insolvent IFA businesses but IFAs who have been doing a good job are forced to pay out.

But providers are unenthusiastic about plans to renew the subsidy next year.

GE Life believes there is a need to look at the wider picture of a market after depolarisation before deciding if a subsidy should continue while other providers say discussions are continuing.

Money Marketing understands that the ABI, which is leading talks with Aifa over the continuation of the subsidy, has not yet brought product providers together to discuss the issue.

Pearson Jones director Nick Conyers says: “I suspect that a lot of providers would find they had no marketplace if IFAs were forced to consolidate because of compensation costs. I am naturally keen for providers to continue the subsidy.”

Brodie says: “If IFAs are doing a good clean job, why should we, who have no financial involvement at all, pay? Those who have a financial part in the transaction should pay and that includes providers. If they want out then so do I.”

Clerical Medical pensions strategy manager Nigel Stammers says: “The issue is over whether IFAs can cover the costs themselves. Bigger firms can while smaller firms are struggling and we are painfully aware that we do not want to see IFA firms going to the wall.”

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