Hargreaves Lansdown chief executive Ian Gorham has called for a review of the Financial Services Compensation Scheme after it was hit with a £3m levy bill.
Last month, the Financial Services Compensation Scheme announced a £93m interim levy on advisers. The levy, first revealed by Money Marketing, includes FSCS compensation costs of £86m, mainly to compensate Lifemark investors, and management expenses of £7m.
Gorham says: “It is disappointing that shareholders in a reputable firm such as Hargreaves Lansdown must foot the bill for the incompetence of others. We have made our feelings on the matter known and believe the way the FSCS is funded and operates needs to be reviewed.”
Gorham’s comments come as the firm posted a 38 per cent increase in underlying profit before tax in the six months to December 31, 2010. Profit before tax stood at £59.3m in the last six months of 2010, compared to £39.8m in 2009. However, the £3m levy has reduced that figure to £56.3m.
Total assets under administration rose by 27 per cent to £22.3bn in the second half of 2010 while revenue increased by 30 per cent to £97m. The group also saw total net business inflows of £1.34bn for the six months to the end of 2010. HL is paying a total interim dividend of 4.5 pence per share.
Gorham says: “I am pleased to report that for the six months to December 31, 2010 we have achieved record revenue, profits and total assets under administration . This has been achieved with a backdrop of continuing economic uncertainties both at home and abroad. Stock markets have risen and net business inflows have virtually matched last year’s record amounts, resulting in a significant increase in our assets under administration of £4.8 billion in just 6 months.
“Despite increased costs relating to our new office building, continued investment in IT systems, increased loyalty bonus payments to clients and most notably the FSCS additional levy of £3million, our costs have been tightly controlled. This prudence, allied to income from assets and an enhanced cash management strategy have delivered a 41 per cent rise in profit before tax and an associated increased profit margin.”