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Endowment complaints to keep FSCS levies high

IFAs holding client money face biggest rise in levies while burden from pension review almost doubles to £47.5m.

Continuing high levels of endowment complaints mean Financial Services Compensation Scheme levies will remain high for advisers in the next year.

There is a small drop in the burden for the levy group containing the bulk of advisers from £47.1m to £42m but the levy for brokers holding client monies is increasing dramatically from £1.5m to £11.2m.

As expected, the pension review levy is almost doubling from £24.8m to £47.5m.

Aifa is still in dispute with the FSCS, claiming it is acting outside its jurisdiction by paying old pension review claims that Aifa believes would be thrown out under general law.

The overall industry levy for the next year will rise by 29 per cent from £74.8m to £104.6m, according to the FSCS’s projections. The levies will be formalised in March.

The FSCS says a split-cap levy looks set to be introduced in 2007 but it is too early to estimate costs as Exeter Fund Managers and BFS Investments are yet to go into default. BFS is in liquidation and Exeter is in administration. The FSCS says most of the burden will fall on fund firms but advisers are likely to bear some of the costs.

It is pursuing precipice bond providers to claim back compensation paid out where adviser firms have gone bust and says it will continue its strategy of trying to recover funds if it believes it has a case.

Chief executive Loretta Minghella says: “We must have the funds available to pay compensation when we need to. We recognise our levies are sometimes tough news for those sectors of the industry that must pay them. However, having an efficient and effective compensation service is good for consumer confidence and good for the industry as a result.”

Aifa director general Chris Cummings says: “These initial levy indications strengthen our resolve to secure a fairer system for the IFA sector. IFAs who do not hold client money and are not exposed to the pension review are the only ones to benefit from a decrease but their total bill remains a staggering £42m.”


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A bull case for US equities?

Neptune video: a bull case for US equities?

Watch Felix Wintle, head of US equities at Neptune, discuss why he believes US equities are in a structural bull market and the key factors that can drive the S&P 500 higher.

In the video, Wintle addresses the following:

• The US market and why — despite equities rising from 2009 — he believes the structural bull market only started in 2013
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