British Bankers’ Association chief executive Angela Knight has hit out at the FSA over its latest Financial Services Compensation Scheme reform announcement claiming the regulator has failed to address all her concerns.
The FSA has changed some of its proposals to radically reform the FSCS by dropping plans for wholesale firms to contribute in a general pool in the case of emergencies.
But the FSA is likely to press on with the rest of the reforms which have been praised by the adviser community for creating a fairer system of compensation in which adviser levies will drop significantly. A policy statement is expected soon.
Knight says the proposals are unfair as they go against the “polluter pays” principle and rely on some business sectors cross subsidising others.
The BBA has been vociferous in its opposition to the proposals since the FSA’s FSCS consultation paper in March and is understood to have investigated the possibility of judicially reviewing the proposals on the basis they are unlawful.
Knight says: “We are extremely disappointed the FSA did not address the full range of concerns we and a significant number of other trade associations identified.
“The FSA threw us one olive branch – shelving the idea that wholesale banks should contribute to the FSCS – but they then qualified that by adding it was not being considered ‘at this time’.
We remain concerned that the FSA ‘s proposals to rely on sector cross-subsidy to increase the capacity of the scheme goes against the ‘polluter pays’ principle . Some business sectors will therefore be increasingly penalised for the faults of others.
Nor has the FSA done anything to assuage our concerns that some firms will have cost increases of up to 4,000 per cent under the new proposals.”