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FSCS boss: We want advisers to think our levies are fair

Mark-Neale-at-office-in-2014-700.jpg
FSCS chief executive Mark Neale

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.”

Risk-based FSCS levy will cause advice firm closures, adviser trade body says

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.”

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Thinking and Knowing are opposite ends of the pole Mark !

    To think something is fair, suggests there is doubt, sorry we need to know its fair.

    You carry on thinking ole chum, because it ain’t fair not for us and certainly (and more importantly) our clients (who are the ones that pay) that is fact, we know that.

  2. Julian Stevens 24th July 2018 at 1:51 pm

    The problem isn’t the way in which the FSCS is funded, it’s the perennial FAILURE of the FCA to enact measures to stem the avalanches of uninsured liabilities for bad advice which continue to fall upon it.

    It’s all very well for the FCA to have started requiring intermediaries to submit details of advice on/sales of potentially toxic UCIS, but it’s all far, far too late, a classic example of trying to lock the stable door long after the horses have bolted. The damage has already been done and the consequences of that damage will continue for years to come to fall on the FSCS. My guess is that it could take anything up to a decade for it all to wash through the system. Given that scenario, what’s the outlook for public confidence in the advice profession or, come to that, in the FCA’s regulation of it?

  3. Nicholas Pleasure 24th July 2018 at 2:04 pm

    Mr Neale, the problem isn’t really with you. It is about the failure to regulate properly and about allowing unregulated investments to benefit from the generosity of the regulated community.

    Your levy will never be fair. When this started it was a few hundred a year to cover people who had been missold the odd with profits bond. Now it seems to be underwriting no end of scams.

    The entire regulatory system needs rebuilding from the ground up for the benefit of consumers, rather than those that run it.

  4. If Mark Neale wants advisers to have confidence in the FSCS he has got his work cut out. I felt completely stitched up with the one small case I had to deal with them about and the other occasion I had to deal with them (on behalf of a client) I was amazed at the reaction I got from the ‘assessor’ although I got the right result in the end.
    At present I would say their reputation is dismal.

  5. What we know is important Mr Neale: thinking has nothing to do with it

  6. Also, we need a definite answer regarding whether FSCS recognises the 15 year longstop.

    Mark, you told me that it didn’t yet I have a letter from FSCS saying it does.

    What is it?

  7. Christopher Petrie 25th July 2018 at 8:27 am

    Does a 15 year long stop matter so far as the FSCS is concerned?

    There are few claims after that length of time and for those cases, it’s the general pool that pays out.

    This isn’t like the FOS where individual firms can be made to defend very old cases. For it to be with the FSCS, that firm would have had to have gone bust already. A long stop would be pretty irrelevant.

  8. Wouldn’t it be better to have a fair system rather than hope that advisers think it is fair (which is a matter of opinion rather than fact).

  9. Well, I don’t think it’s fair. A fair system would be a product levy. The levy could be proportionate to the risk.
    The problem with many of the people in FCA and similar organisations is that they have never had to work for a living and spend other peoples’ monies far too freely!

  10. Mark, surely in a ‘fairly funded’ industry system those who fund it should be given more credit, as currently it would appear Government funds it. Also it would be a much fairer system if when the system chooses to pursue a person or organisation that brings Financial Services into disrepute the whole of the resulting fines are used to support the system, and therein the great and good of the industry, rather than simply filling the coffers of HMRC for ‘good causes’?

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