View more on these topics

Brace yourself for nasty surprises

At least a debate has started about alter-natives to the Financial Services Compen-sation Scheme. The FSA appears to be willing to listen and is even making some suggestions.

The LIA and Ken Davy are now backing a product levy, with Davy adding ruefully that he advocated the idea a decade ago before it was rejected. What most agree on is that the current system is unsatisfactory. It threatens to bring down good firms along with the bad, the up until now lucky along with the unlucky. It will also be taking a substantial bite out of any profits that advisers big or small are making this year or compounding losses.

The crunch comes at just the wrong time for firms which are having to take some of the biggest decisions of their existence about the future direction of their businesses. At the same time, the silence of most providers, with the honourable exception of Clerical Medical, suggests that next year may be even more painful when the cross-subsidy which fell well short this year may fall to nothing.

For the moment, Money Marketing hopes providers reconsider although as depolarisation bites we assume many will choose to look after their own, that is, IFAs that deliver large volumes of business or multi-ties on whose panels they feature.

So a product levy may be the best long-term solution and Money Marketing is minded to support the idea. We would, however, like to see other types of arr-angement modelled so that the fairest solution for firms and clients can be found.

Unfortunately, it may not be possible to arrive at a solution for next year. Without the Pass scheme and with some high-profile failures likely to hit the scheme, the final bill from the FSA may be an even nastier surprise than last year. Advisers should brace themselves.


Deposit accounts ahead of inflation

Wealthy taxpayers can beat inflation with more than half of all deposit accounts currently available despite not being able to with any last year. Survey results from Bates Investment Services show that higher-rate taxpayers can get a positive real rate of return with 51 per cent of all deposit accounts. The same survey last October […]

Product Matters

With income tax relief increased from 20 to 40per cent, venture capital trusts are the talk of the town while enterprise investment schemes are largely forgotten. However, while EISs qualify for only 20 per cent income tax relief, they are demonstrably more tax-efficient than VCTs. EISs offer capital gains deferral relief for gains crystallised in […]

Testing times for KFI systems

AMI director Chris Cummings“In September, the AMI challenged all lenders to publish their KFI test systems. Failing this, we said that they should have them ready by the start of October so that their customers (that is the intermediary market, in case anyone forgets), could test them out. It would seem odd, after all, that […]

Ewing set to leave Fundsdirect

Fundsdirect chief executive officer Sean Ewing is understood to be leaving the company. Company founder Ewing is thought to have tended his resignation in August but will be leaving the group in the next few days.


News and expert analysis straight to your inbox

Sign up


    Leave a comment