The FCA published its long-awaited review of funding for Financial Services Compensation Scheme levies just before Christmas. Underlying the wide range of proposals is an encouraging recognition that the current system is neither sustainable nor fair.
However, it lacked attention to an issue of utmost importance: the level of compensation.
The FCA is right to say FSCS compensation should be a last resort but more needs to be done to ensure it is just that. It seems to think the consumer is protected if they are compensated but what about those who still have to suffer non-monetary distress?
Of course, there will be one-off failures caused by unusual events but where we see the same problem reoccurring we need to learn lessons and stop it. This certainly seems to be the case with pensions intermediation. The FSCS proposal for a supplementary levy and estimate for next year suggests it is a problem that is out of control.
I do not think a single measure will stop pension scammers but a range of issues that make it harder for them should reduce the risk to the public.
At the moment it seems that, if a proposed course of action will not provide a guaranteed solution, it becomes reason not to act. We should be finding any way to make it harder for people to be conned out of their savings. The collective effect of different measures, such as the cold calling ban, could have the overall desired impact.
And it is not just about the pension scams. Compensation is a poor way to help consumers. Prevention is better than cure. The level of the levies is an indicator of the effectiveness of the regime in protecting consumers; minimising the need for compensation should be a higher priority.
Chris Hannant is director general of Apfa