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Call for IFA day of action over FSCS levies

IFA firm Informed Choice has resurrected its lobbying campaign to reform Financial Services Compensation Scheme funding and is organising a “day of action” next week to highlight the current broken model.

The FSCS Levy Action Group was formed by Informed Choice last February after some advisers saw huge increases in their FSCS bills.

An open letter and petition to FSA chief executive Hector Sants and Treasury financial secretary Mark Hoban generated 678 signatures calling for urgent reform of the FSCS funding model.

This year the group is centering its lobbying efforts on a “day of action” on April 25, as Informed Choice says this is the day most interim levies are paid.

Investment advisers have been hit with a £60m interim FSCS levy for 2011/13, to cover the cost of firm collapses including MF Global Keydata, CF Arch cru and Wills and Co.

The campaign is calling for better categorisation of firms within the FSCS funding model.

The  current system issues levies based on what sub-class firms fall into, such as investment intermediation and investment fund management. However the way the sub-classes are defined has meant the collapse of providers and stockbrokers has fallen on the investment intermediation sub-class.

The campaign is also aiming to raise awareness among consumers that the FSCS is funded by the industry, and that consumers ultimately pay the cost through charges.

Advisers can pledge their support by visiting the FSCS Levy Action Group website on April 25 to add their name, email address and post code. This will send an automatic open letter to Hoban via email.

Informed Choice managing director Martin Bamford (pictured) is aiming to send at least 1,000 emails to Mark Hoban and to get the hashtag #HelpUsHoban trending on Twitter.

Bamford says: “It is important we raise awareness about this issue and do what we can. It is becoming such a ridiculous burden on business owners and the demands on the FSCS just keep on coming.

“It is an unstoppable force and every time a firm collapses we think ‘there goes another £1,000’. The idea is to raise awareness and get more people on side.”

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Comments

There are 19 comments at the moment, we would love to hear your opinion too.

  1. incompetent regulators award team 20th April 2012 at 1:07 pm

    Martin

    Don’t waste your time. Hoban hasn’t listened to date and you won’t make any difference.

    There have been guys out here lobbying for years and nothing has changed.

    Going through the front door doesn’t work. The Leviathan is too big and you need to find the achilles heel.

  2. After spending the last 40 yrs in Financial Services it was on the cards that there were going to be problems with FSA, here we have a non producing organisation making rules and regulations for firms who are on the whole sef employed who only get paid if they produce bus, unlike the FSA who have this disease called money making backsides, they get paid iwhat ever they do, ask yourselves would you employ Sants on the salary hes on, could he produce enough bus i think not

  3. Well done Martin!

    For all of us, there’s Everything to gain, Nothing to lose!

  4. I could agree more! The FSCS have a statutory duty to allocate and make use of funds aporopriatly, does paying their lawyers nearly £8m to pursue ifa firms,many of which do not even trade for matter ls arising from Keydata really in the industry interests? As we all know it will just be added to the levy!!

  5. The FSCS like the FSA do not listen to anyone. Hoban like Sants has never listened to anyone and even if he gets a 1000 emails he still wont listen. He is as arrogant as those in Canary Wharf

  6. Martin, very happy to support the cause – but I think the problem really is that the reduced oxigen levels at the top of the ivory tower these pompous idiots inhabit deprives them of the ability to process the information they receive – even if they hear it in the first place….they are, quite obviously, a long way from the planet we inhabit!!!

  7. Well done Martin – can you start a similar campaign that states CMC’s are liable to pay any FOS case fee they bring against an adviser with the view that if the complaint is upheld by FOS the adviser then needs to foot the bill as well as any compensation due.

    Under the current rules advisers could well be put out of business even if they never have a case upheld against them the way CMC’s are going about their business!

  8. I guess we would all agree that the FSCS is needed as part of the protection for the UK consumer of financial services. The root cause of the problem is that the intermediation subclass is just too wide. Take a look at the legal basis of the class and ask a simple question. How can such a broad group of activities form one subclass?

    Any of the following in relation to designated investment business
    • dealing in investments as principal;
    • dealing in investment as agent;
    • arranging (bringing about) deals in investments;
    • making arrangements with a view to transactions in investments;
    • advising on investments;
    • providing basic advice on a stakeholder product;
    • safeguarding and administering of assets
    • arranging safeguarding and administrating of assets;
    • operating a multilateral trading facility.
    • agreeing to carry on a regulated activity which is within any of the above.

    BUT excluding activities that relate to long term insurance contracts or rights under a
    stakeholder pension scheme or a personal pension scheme.

    It’s a bit like some weird classification of the animal kingdom, “yes, dolphins and insects they are the same thing!!”

    Someone somewhere thought that the above all had similar attributes. They were wrong and they need to accept that and change it. Now.

  9. If I could be sure that virtually every IFA commited themselves to withold their FSA fees for a period of say 2 months, when given the bill and FSCS levy when given the bill, I would also happily take the consequenses. They are going to force me out of business on the balance of probabilities, so why not say enough is enough.

  10. Nick Bamford
    I applaud your wishes, but to be honest, I think you would get more activity out of a pair of hibernating cane toads than that pair of jokers Sants and Hoban.
    Petition. Forget it.
    Try something else.

  11. Well Done on this initiative, Martin.
    It’s too easy for people to say nothing will come of it. What I would suggest however is that Andrew Tyrie, Chris Leslie, Mark Garnier and Harriett Baldwin be copied in on everything.

  12. Mr Anonymous has my vote.

    The only help any of us are going to get is that of our own making. If EVERYONE – and by that I mean directly authorised firms and all the networks – got on their hind legs and said OK, until we are given a voice and some action on reform is undertaken, all fees will be withheld, perhaps we might get the profile on this lifted and have a hope of stopping this larceny.

    Having never once in a career of 21 years had a single complaint, never mind an up-held one, from May 1st I must pay £2000 a month to my network for the privilege of two IFA’s being able to stay in practice and enjoy life time of unlimited liability. That’s an increase of £900 or 82% on my previous fees directly attributable to the FSCS Levy.

    This whole three-ringed circus is way, way beyond anything that could be regarded as reasonable. This, on top of all the other crap we have to now endure will be the last straw for a sizeable number of IFA’s and guess what – when they then throw in the towel – and they will – those that are left will have to share the ever expanding bill between even fewer of them, so that alone will guarantee a further and substantial hikes in costs before the year is out.

    We’ve also got the FSA’s already announced budget increase of another £42m for the next year to look forward to; what’ll that be? Another £1000 a month each?

    Barmy.

  13. @ Polfers

    £2000 per month – isn’t it time to change networks? How have they calculated those figures?

  14. @Polfers
    I would have put my name to my boycott post,but some ressot at the FSA might construe that as being an uncooperative stance towards the regulator and trigger some sort of punative response.
    The problem is how does one discuss such tactics and coordinate such action in a public arena.
    Answers please…..

  15. @Polfers

    If your firm is as good as you say I will happily provide the services you need for £900 per month, or even less, depending on precise criteria.

  16. As the FSA has already proved that it is:
    A: Not answerable to the elected Government
    B: Totally ignores the Treasury Select Committee
    C: Much better paid than the elected Government
    What chance do we have?

  17. well, at least Martin is doing something. Unfortunately those respondents to his article statting that the cretins of Canary Wharf won’t take a blind bit of notice are correct.
    Sign the petition anyway, but the only way anything will be done is EVERY IFA withheld their fees and brought the inequalities of the system to the public and politicians attention. Unfortunately, we don’t have the power the tanker divers have.

  18. Well done Martin. I will be signing.

    On reading this article I was reflecting on the kind of articles Martin wrote when he first appears in MM a year or so back. They were the kind of smug, know-it-all, RDR ready kind of things that attracted a significant amount of bile fueled comments.

    His recent articles have been much more thoughtful, reasoned and helpful and the responses indicate that these are welcomed. Thanks Martin, it hasn’t gone unnoticed and your FSCS campaigns should be supported by all (event those who suspect the FSA won’t listen)

  19. A noble gesture but unfortunately likely to be about as effective as throwing marshmallows at a tank. The only way forward, as I see it, is for the law to be changed. If the TSC can’t accomplish that then there’s little, if any, prospect of anybody else being able to do so.

    Keep writing to your MP ~ again and again and again.

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