The FCA is continuing to discuss the possibility of a new centralised compensation pool to replace the Financial Services Compensation Scheme as well as how providers should contribute to the lifeboat fund.
Money Marketing understands that since the FCA released its long-awaited consultation on FSCS funding reform in December, it has continued to schedule roundtables and focus groups with a range of industry representatives.
Over the last two weeks, discussions have focused around provider payments and combining professional indemnity insurance and FSCS bills.
It is understood that the Association of British Insurers has been firm in meetings that providers should not be included in the same funding pool as advisers or subsidise advisers’ FSCS fees.
When the consultation was released, the ABI released a statement saying it was “very concerned at the proposal for insurers to bear additional costs to guard against failures by intermediaries such as brokers and advice firms – something insurers have very little direct influence over.”
The ABI said: “We see no justification for the blurring of responsibilities in this way. We will be engaging fully in the consultation, with a focus on challenging the rationale behind this idea.”
The trade body said it would comment further when it had finalised its response to the consultation.
One source with knowledge of the meeting described a session on provider contributions as “fireworks”.
A senior FCA source confirms that the ABI has greeted proposals to increase provider contributions “like a lead balloon”.
Personal Finance Society chief executive Keith Richards says: “They have a valid argument but equally there is also a responsibility to protect the public interest from failures against products they manufacture.
“You can see why the regulator is coming at it from this perspective…Advisers have actually paid for manufacturers failings, but the argument we have always maintained is about broadening the scope. If you reshuffle the levy decks chairs you have to make some people happy and some upset.”
“No one is going to easily concede to paying more contributions.”
Richards has now expanded his idea of a ‘product levy’ – a small additional fee to be paid on top of investments by consumers – so that it could be used not just to offset FSCS costs but also to fund financial education and awareness projects like those offered by the Government’s public guidance services.
Richards says the regulator also had further discussions at a roundtable last week about the possibility of creating a centralised compensation fund that would merge professional indemnity insurance cover and the FSCS.