Hargreaves Lansdown founder and executive director Peter Hargreaves has called for a radical shake-up of compensation scheme funding, with the taxpayer taking on some responsibility for costs.
He was speaking after the company revealed it had been hit with a £3m Financial Services Compensation Scheme interim levy. The firm was hit by both an interim levy for investment advisers totalling £93m and a £233m interim levy for investment fund managers, mainly to compensate Lifemark investors.
Hargreaves says the Government should either pay the cost of regulation and make IFAs pay if things go wrong or make financial services firms pay for regulation and pay the compensation bill itself if problems arise.
He says: “It needs to be one or the other. Firms should not have to pay for something and then when it does not work, have to pay to fix the mistakes.
We always said that the types of products Keydata provided were things that we would never touch. No one understands them and we have never recommended them, yet we foot the bill.
“The Government should foot the bill if the regulator has got this wrong, followed by the people who flogged it.”
Hargreaves’ comments come as Hargreaves Lansdown posted a 38 per cent increase in underlying profits in the six months to December 31, 2010.
Profit was £59.3m compared with £39.8m for the same period of 2009 but the £3m levy has reduced that figure to £56.3m.