The consequences from firms making fast fraudulent profits then folding are increasingly being felt at the end-customer level, says LEBC director of public policy, Kay Ingram.
The issue should be treated as a separate “cost of advice” problem, she adds.
Commenting on the publication of the FCA’s call for input on its review of the RDR and Financial Advice Market Review yesterday, Ingram says: “There is more work to be done in this area.
“The Financial Services Compensation Scheme safety net is not to be abused by firms which set out to recklessly pursue short-term profits, but then fold and leave their liabilities with compliant firms.”
The issue also stunts much-needed public confidence in the industry, she says.
“Picking up the bill for fraudulent behaviour of other is a tax on advice and increases costs to consumers and needs to be addressed.”
Outgoing FSCS chief executive Mark Neale says advisers are already paying far less than what they could be, despite the new £69m levy announced for this year last November.
Neale confirmed in March that just over £300m has been recovered from failed financials services firms since 2014.