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Final 1.5m from life offices for IFA compensation levy

Product providers have agreed to make a final £1.5m payment to the subsidy of IFAs’ payment of the Financial Services Compensation Scheme.

The pledge of new cash means that all IFAs who have already applied for the 2004 levy will effectively receive an additional 50 per cent from Pass, the subsidy administrator, by January next year.

Money Marketing revealed in October that product providers were split over making more money available to the subsidy, having already pledged 3m to it this year.

This 3m represented just 15 per cent of the levy for investment firms, down from 85 per cent in previous years, and caused huge problems for IFAs struggling with an increase in the subsidy because of a rise in endowment complaints.

Pass says it required over 50 per cent of its 20 provider members to vote for an increase in the subsidy and it achieved this result on Monday. All Pass members will contribute to the increase but not in equal amounts.

Pass chairman Peter Hales says: “IFAs have faced a significant hike in their FSCS levy this year. Providers have decided, in view of this financial challenge, on a one-off extension of support in recognition of the difficulties faced by the minority.”

Aifa director of policy Fay Goddard says: “We are very pleased that providers have reconsidered the situation and have come forward with further funds. We will be continuing
with negotiations to see if we can keep the subsidy going next year.”

Pearson Jones director Nick Conyers says: “This is not really going to make a huge difference but it is better than nothing and is very welcome.”

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