View more on these topics

Call to base FSCS levies on risk

The House of Lords economic affairs committee has branded Financial Services Compensation Scheme levies “unfair” and called for calculations to be based on firms’ levels of risk.

In its Banking Supervision and Regulation report, published this week, the committee says that while it is impossible to accurately measure the risk of bank portfolios, calculating levies on the basis of the size of an institution rather than its risk profile is problematic.

The report states: “Some ineq-uity in the levies charged by the Financial Services Compensation Scheme is inevitable. The current scheme is nevertheless clearly unfair to institutions which, like the building societies, are constrained from the riskiest business. It is also a potential source of destabilising moral hazard.

“The Government should promote changes to ensure that contributions to the FSCS should be at least broadly related to the riskiness of the business in which regulated firms engage.”

Investment advisers have been hit by a huge increase in FSCS levies, which rose to £44m this year from £9m last year.

Investment advisers also had to pay an additional interim levy of £40m because of the default of stockbroker Pacific Continental Securities.

The committee is calling for the Government to move tow-ards pre-funding of the FSCS “as soon as practicable”.

The report says: “A pre-fun-ded deposit insurance scheme would have a counter-cyclical effect – money levied in boom times would be returned to the banking sector during times of financial fragility. It would also increase depositor confidence.”

Baronworth director Colin Jackson says calculating FSCS levies based on risk is the only way forward.

He says: “Why should I pay levies based on the same calculation as a bank that has been reckless? For advisory firms who act for high-net-worth clients, the levy will be higher than for execution-only firms but overall that is the only way to make the calculation fair.”


Caversham goes into liquidation

London IFA firm Caversham Buchanan entered voluntary liquidation on May 13 and liquidator Asher Miller of David Rubin & Partners was appointed.


Can guided sales hit target?

The theme of the Association of British Insurers’ biennial conference on June 9 is Today’s Challenges, Tomorrow’s Opportunities, which fits perfectly with the debate over reform of financial advice.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm