The FSA has reiterated its stance on reviewing the FSCS, saying that it cannot speed up the process until regulation in Europe is finalised.
Speaking at the All-party Parliamentary Group on Insurance and Financial Services yesterday, FSA director of conduct policy Sheila Nicoll said it is “fairly unlikely” that completing the review process by April 2012 would sufficiently resolve the issue. “We would have to consult for three months,” said Nicoll. “We want any changes to be sustainable and not throw up problems elsewhere.”
She cited delays in the Deposit Guarantee Scheme Directive and the Investor Compensation Scheme Directive as factors affecting the review. “Discussions around deposits are due on July 4,” she said. “A lot of the principles surrounding the FSCS review will be included. We hope to be able to take matters forward once there is certainty there.”
APPG chair Jonathan Evans pointed out that there is uncertainty surrounding European issues. “We have no timescale as to when agreement will be reached in Europe,” he said. “The FSA recognised the need for a review in 2009. We are not beating the FSA up to carry out the review. It knows we need one.”
Nicoll assured the APPG that the FSCS review would take place “relatively quickly” because of the FSA’s previous work, saying: “We have had chats around some of the issues such as cross-subsidising and sub-classes.”
Nicoll also stated that there are duties on the part of the FSCS to claim recoveries from third parties which would then be credited back to levy payers. Evans responded that this was “cold comfort to high street brokers whose bills are five times greater.”
Thameside Wealth Management director Tom Kean says: “It is another kick in the nether regions. Maybe the FSA should consider giving us some good news for once.”