In its Banking Supervision and Regulation report, published today, the committee says while it is impossible to accurately measure the riskiness of bank portfolios, levies should not be calculated purely on the size of institutions.
The report states: “Some inequity in the levies charged by the Financial Services Compensation Scheme is inevitable. The current scheme is nevertheless clearly unfair to institutions which, like the building societies, are constrained from the riskiest business. It is also a potential source of destabilising moral hazard.
“The Government should promote changes to ensure that contributions to the FSCS should be at least broadly related to the riskiness of the business in which regulated firms engage.”
Investment advisers have been hit by a huge increase in FSCS levies which rose to £44m this year, up from just £9m last year.
Investment advisers also had to pay an additional interim levy of £40m because of the default of the stockbroker Pacific Continental Securities.
The committee is calling for the Government to move towards pre-funding of the FSCS “as soon as practicable”.
The report says: “A pre-funded deposit insurance scheme would have a counter-cyclical effect: money levied in boom times would be returned to the banking sector during times of financial fragility. It would also increase depositor confidence.”