The FSA and the Financial Services Compensation Scheme say firms can resubmit tariff data on which their FSCS levy is based, but poor original estimates are unlikely to lead to FSCS refunds.
However, the bodies say firms’ levies may be reviewed and refunds paid where there is found to a ’mistake of fact or law’ in the original data submitted by firms.
The FSA and the FSCS have published an open letter to the industry following requests to resubmit the tariff data firms submitted for the 2010/11 levy period.
Advisers have expressed concerns that they have been hit with huge increases in their FSCS levies due to the change in the way levy is calculated.
The FSCS confirmed to advisers in January that the interim adviser levy was calculated based on the amount of eligible income a firm generates rather than the number of registered individuals at a firm.
Firms can opt whether to class their eligible income as activities relating to the investment fund management class or investment intermediation sub-class.
Depending on a firm’s year-end, this data would relate to either business in the year to March 31 2009 or December 31 2009.
The FSA and FSCS say payment of FSCS levies was due on February 23 irrespective of any request to revise tariff data.
But it adds that firms can apply to amend their tariff data up to two years after the original data was submitted.
The letter says: “In so doing, firms must be able to satisfy the criteria included in the rules, which allow for the FSCS to agree to remit or refund a levy where in the exceptional circumstances of a specific case the FSCS considers that payment of the levy would be inequitable.
“A poor estimate by the levy payer, when providing the tariff data, is unlikely, of itself, to amount to an exceptional circumstance. By contrast, a mistake of fact or law may give rise to such a claim.”
The FSA and the FSCS say it will take time to go through all the submitted requests before any decision on refunds can be made.
The bodies will plan to handle all resubmission requests received by March 31, 2011.
The FSA notes this date is for administrative purposes and not an extension of time to resubmit data.
If firms decide to resubmit their tariff data then they should contact the FSA who will receive the resubmission on behalf of the FSCS.
The resubmission must be in a letter from the firm’s chief executive officer (or equivalent) and provide:
- an explanation why the firm wishes to resubmit its tariff data;
- an explanation how any error in the previous data occurred/why the data was incorrect;
- what the revised data now amounts to; and
- an assurance that systems and controls are in place to ensure data will be reported correctly and consistently in future.
Firms should also include any other relevant information.
The letter says: “Working with the FSA, the FSCS will consider and make a decision on each case. If a request to resubmit data is approved, the firm’s share of the levy will be recalculated and a credit note or additional invoice issued.
“Where the firm has a credit balance a refund may be made, or the amount set against future levies.”
Aifa policy director Andrew Strange says: “Having identified a change in the underlying tariff data that determines the allocation of the FSCS levy, we are pleased that FSA and FSCS have responded to our concerns with an open letter to the industry.
“When we spoke to individual members it was clear that allocating income between ‘investment’ and ‘life and pensions’ classes is complex and as such we sought clarification from FSA and FSCS over what action firms should take.
“Anyone who believes the data they submitted may be incorrect should review the open letter and contact FSA accordingly.”