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Govt rejects call for ‘priority’ review of FSCS funding

The Government has refused to back calls from the Treasury select committee for the FSA to make reviewing the funding of the Financial Services Compensation Scheme a priority.

The committee made the call in its report into competition and choice in the banking sector, published in April.

The Government’s response, published today, says the review is a matter for the FSA.

It says: “The FSA has commenced a review of the funding model of the FSCS and will proceed to a formal consultation and cost benefit analysis once discussions on European directives affecting compensation arrangements have been concluded and the Government’s policy on the future role of the FSCS in the context of the reform of the regulatory architecture for financial services has been settled.”

In its April report, the committee said it accepts the FSA is watching developments in Europe before continuing its review, but added an “assessment” of the UK scheme could inform consideration of the Investor Compensation Scheme Directive. The ICSD will have a fundamental impact on how the scheme in the UK is set up.

Last week, the European Parliament voted on a package of amendments to the European Commission’s proposals for the ICSD. They included rejecting proposals to double the maximum guaranteed level of compensation to €100,000, making the scheme pre-funded and making it cover “bad advice”, which was not originally proposed by the EC.

The FSA suspended its review last November but now says it intends to restart it with a three month consultation in November this year.


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

  1. Stephen Hepburn 12th July 2011 at 1:36 pm

    Lets allow small Brokers to go to the wall paying for wrong advice that none of them were involved in.Meanwhile The Clowns in Europe make decisions which we can platinum plate whilst most Europeans ingnore the rules.So much for Cameron and Osbournes war on such matters!!!

  2. What a waste of money. The TCS recommend something and the government says get lost.
    This does not bode well for small IFA,s for the future. Its appears that reports are prepared with recommendations just to have them torn up into little squares and hung in the smallest room of the house.

  3. stephen rowland 12th July 2011 at 2:20 pm

    The writing is on the wall & has been for quite a few years now – it feels being a small 1 band IFA to be like the ‘Last of the Mohicans’ or ‘300 Spartans’. We ought to now accept that Govt & the regulator does not want ‘Fred in the Shed’ adviser’s & now probably with the RDR – be ble to get their wish fulfilled! If the Exams doesn’t get you out – as sure as hell the charging & Gabrielle reporting surely will! Especially if you don’t have HNW or exist solely on clients from Middle England! Will the last small IFA turn out the lights in 2012 – RIP!

  4. Mind made up, getting out before the next big bill to arrive. I for one can not go on trading with this potential unlimited liability hanging over my business.
    Protection only business from now on and introduce investment business.
    PS, 26yrs giving financial advice, 2 complaints (not upheld), qualified and throwing in the towel, enough is enough.

  5. Ditto Andy
    We should all rename ourselves
    Financial UNlimited

  6. Another IFA likened being a sole trader or partnership within FS to being a Lloyds name and that is correct and is one reason why this needs looking at NOW and not later (I am a Ltd company, so whilst they can come to me for willful ommissions, if they hit me for massive FSCS levy’s for someone else’s errors, although I will be out of business and probably no longer able to Phoenix, which I have never done and would be an improvement, at least if I leave FS, they can’t take my home for someone else’s errors!)

    With regard exams putting IFAs out of business, I finished my Diploma today (4 months, start to finish, but taking on no new clients and just working reactively during that time). The CII’s R0 exams cover the syllabus agreed by OFQUAL with the FSA, so the exams are NOT the CIIs fault. The conclusion I have come to and teh results I obtained are that these are just a rehash of the original FPC, but at one level higher, requiring a little extra study, but a higehr pass mark. They cover pretty useless information (especially R01) and I now firmly believe, this is part of a conspiracy between the FSA and the Banks (pre meltdown), to finally get the IFA sector below a critical mass by early retirement, exam failures and just P**ssed off IFAs leaving the industry, so that ti can then be used as an excuse for the “simplified advice” regime to be pushed heavily by the Banks, with NO reduction in cost to the consumer for simplified advice compared to the Full INDEPEDENT advice which was being provided more cost effectively than the banks ever could.
    Now what I think we need to do is get our exams and then not only beat them at the advice game, but get metter systems in place to beat them at simplified advice as soon as we know what the rules of the game will be.

  7. I find it amazing how the FSA and Government can play the FSA is independent card when it suits them.

    Meanwhile the MAS advert clearly states it was set up by Government.

    So is the FSA independent or not?

  8. Anon 3.46
    Only when the government wants it to be.

  9. Will someone please tell me the difference between the current numpties in Westminster and the last lot. They seem all the same to me.

    Jolly glad I didn’t bother to vote.

    Here’s to the Revolution Bruvvers!

  10. It is the same as the difference between dumb & dumber Harry

  11. I bet if this was about the MPs expenses and duck houses, they would be like a rat up a drainpipe to get it reviewed

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