Apfa has argued the £105m Financial Services Compensation Scheme annual levy faced by investment advisers for next year is “not as bad as it sounds” as it means a further interim levy is unlikely.
The FSCS announced in its plan and budget yesterday that investment intermediaries will pay an annual levy of £105m for 2014/15.
This is up from an annual levy of £78m for 2013/14, but the FSCS also expects to raise an interim levy of £30m on investment intermediaries before the end of the current financial year, taking costs for 2013/14 to £108m.
Apfa director general Chris Hannant says the size of next year’s levy is “concerning”, but hopefully not as bad as it sounds due to the new funding approach being applied by the FSCS this year.
The 2014/15 levy is the first to be calculated under the FSCS’s new 36-month funding approach, which it says will reduce the volatility of annual levies and the likelihood of interim levies.
It means levies for each class are based on the average figure for the past three years.
Apfa says if the FSCS had used its previous approach of looking at the coming 12 months, the 2014/15 levy for investment advisers would have been £76m.
Hannant says: “We hope the long-term situation for advisers might not be as bad as the headline number of £105m suggests.
“Under its new approach, the FSCS is more likely to ‘over-levy’, removing the need for an interim levy next year and should mean some of the following year’s levy is paid in advance. All of which should, in the long term, smooth payments.”