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Group looking at instalments

Representatives from the small business practitioner panel and the Financial Services Compensation Scheme have joined the FSA in a working party to investigate instalment payment of levies.

The FSA has set up the group to look at possible ways which could allow IFAs to pay their FSCS levy on a monthly basis.

The closure of the Pass scheme, which was funded by life offices, coincided with a sudden increase in the FSCS levy, resulting in IFA firms complaining that they could not afford the increased levy and putting pressure on the FSA to try to negotiate a compromise deal.

The FSA cannot develop an instalment payment process itself because it would have to apply for credit status.

An alternative proposal would be to give firms 12 months’ notice of the levy but this has been rejected by the FSCS which says it cannot give more than nine months’ notice.

FSA spokesman Vanessa Wood says: “There will be no change to the FSCS levy this year. It will not be paid in instalments. However, we have set up this working group to look at what can be done in the future.”

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