The boss of the Financial Services Compensation Scheme has highlighted the importance of industry support for the lifeboat fund as he appeals to wanting advisers to think the way it raises levies is fair.
Speaking to Money Marketing, FSCS chief executive Mark Neale says the organisation’s overarching role is to give confidence to advisers.
He says: “We have an important case load of current claims to deal with, but we also need to be sure we can deal with anything that is thrown at us, when our ability to respond is so critical to underpinning financial confidence and stability.”
In May, the FSCS said it was having to levy £71m more than it forecast for 2018/19, including an extra £52m on life and pensions advisers. The increase largely related to impending claims related to defined benefit transfers.
Neale says: “I attach a lot of importance to retaining the support of the industry; we are here fulfilling a purpose on their behalf and it is important the industry feels that the way we raise levies is fair.”
Neale also reiterated his support for a risk-based levy, in principle.
Since April, the FCA has required advisers to provide data on non-mainstream pooled investments, which will inform its thinking on any potential risk-based levy in the future.
Neale says: “The right way to approach that is to ensure that firms that are dealing with riskier products or are engaged in risky areas of advice like defined benefit transfers pay a higher levy to reflect the extra risks that they pose.”
He adds: “That would create a benign incentive to greater prudence, as well as lowering the levy for the firms that are more prudent.”
Neale confirmed 83 claims against British Steel advice firm Active Wealth have so far been filed with the FSCS.
The lifeboat fund declared the firm in default at the end of March and has been handling claims since then
Money Marketing reported in May that FSCS compensation for clients of Active Wealth will be based on comparing the benefits available to a claimant had they transferred to the new British Steel scheme, and the current value of their new pension.
The FSCS is also looking to expand its reach and contact affected investors directly, aiming to remove barriers that might prevent claimants coming forward.
Neale says: “As soon as we became aware of the failure of Active Wealth and their giving lousy advice, we wrote to the organisations representing the members of the fund to make them aware of our service.
“We are now processing the claims arising from the episode.”