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Huge hike for fund firms

The Financial Services Compensation Scheme is forcing fund firms to pay 27m to cover the risk of a fund management group going bust this year.

Investment Management Association chief executive Richard Saun-ders was surprised by the massive hike and has called for a meeting with FSCS chief executive Loretta Minghella to discuss the rise and ask how the figure was calculated.

In its annual plan and budget for 2005/06, the FSCS raised its levy for fund companies from 100,000 to 27m. All fund firms have seen their levy soar regardless of whether they have offered split-capital or structured products.

Saunders says: “We have called a meeting because we are not aware of any company going into liquidation and we want to know what information they have to make this decision.”

FSCS spok-eswoman Heather Tilston says: “We are expecting a significant increase in claims in this area against fund managers. We are making provisions for a company in this group to go in default of the scheme.”

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