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Investment advisers face £125m FSCS levy for 2015/16

Investment advisers will contribute £125m towards the 2015/16 Financial Services Compensation Scheme levy under plans outlined by the lifeboat scheme.

The FSCS’ plan and budget for 2015/16 reveals investment intermediaries will pay almost half the £287m levy for the 12 month period and £13m more than in 2014/15.

Life and pensions intermediaries will have to cough up £57m, some £24m higher than the bill they faced in 2014/15.

The overall levy will rise from £276m in 2014/15 to £287m in 2015/16.

The FSCS says although it expects investment claims volumes to fall as it resolves cases relating to Catalyst and Arch cru, the scheme expects to receive “a significant number of varied and often complex claims in relation to investment advice given by intermediaries”.

Pension claims are also on the rise, particularly in relation to Sipps, the FSCS says.

“We expect this trend to continue and there is considerable uncertainty as to the amount of compensation we may have to pay in relation to these claims,” it adds.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. A funny thing – you cannot be independent for pension advice because pensions and investments are one and the same thing. In April this will be even more the case. So why the hell do we have different fee blocks for life & pensions and investments? Does it not demonstrate how far behind the times the FCA are?

  2. Keep it up and regulate the advisory industry out of business! Glad that I haven’t got a lifetime of this nonsense left to go.

  3. To be fair the levy probably wouldn’t have to go up as much if the Government, which claims that the FCA and FSCS are independent, hadn’t stolen a lot of the fines that banks had to pay.

  4. @ Sam Caunt – Quite so, and to take the point further, and given that we are all encouraged to sever the link between Advice and Products, why is the levy linked to products at all, rather than say turnover?

    Behind the times? I should say so, and also behind where the FCA seem to expect us all to be.

    As has been said elsewhere, it also remains intensely irritating that, just because one authorised idiot sells an unregulated product the rest of wouldn’t touch with a barge pole, we all have to pay the compensation costs. Unregulated products should be excluded from the ‘standard’ FSCS. It really has to be time for the FCA to tackle this, and become a lot more interventionist with regard to products.

  5. @ Sam Caunt

    I have often wondered this ?

    The only thing I can presume is; it gives the FCA the ability to bill us twice

  6. I know that sympathy for accountants is in short supply but I remember when we certified accountants were regulated very well and very cheaply by the acca. there were never any claims so our compensation levy was very modest and built up a fund for potential future use. then we were forced into the clutches of the fsa who increased the cost of regulation tenfold, the stress of regulation a hundred fold swallowed our compensation fund without a gulp and made us pay a substantial further levy to pay for miss-selling of pension transfers, avc plans, endowments etc largely by tied agents. The current system and the way that it makes the good pay for the deeds of the bad is a bit like a teacher punishing a whole class because one boy misbehaved. It is simply wrong.

  7. So my fees payable to the FSCS as an Adviser/IFA will increase by around 75% in total then? Madness!

  8. @Steve D

    Lets not forget, you add this to the increase in PI that we will have to pay due to the suspected increase in sipp and pension claims, as you know the Pi companies will pick up on this and adjust the premiums accordingly, +50%

    Its more than madness, its robbery and its legalised ! its like Kim Kardashians rear end, there is no way around it !

  9. @DH at least her rear will split the difference!

  10. @Gerry Cooper

    Well said! The FCA claim that SIPP complaints are on the rise! ! ! When will they realise that their is nothing wrong with the use of SIPP’s it is the use of unregulated investments within them that is the issue. How much of a travesty is it that we pay to be regulated financial advisers and then have to pay for those who aren’t regulated when they mess up. The FCA needs to spend more time policing unregulated investment/pension advice and less claiming regulated advisers are miss-selling SIPP’s.

  11. Dear adviser community,
    Am otutraged on your behalf and of the general public who either end up paying for this either through increased costs, or worse, through losing access to decent financial advice as the industry is choked to death under the weight of fees, bureaucracy and market meddling from by-standers with inadequate understanding or “skin in the game”.

  12. it should be so easy. regulating products would be so much easier than regulating human behaviour so why not have an regulator approved risk profile system for products ( which would not stop the sale of a riskier item as part of a portfolio) and qualified advisers would then have to sign a statement periodically to say whether they had sold unregulated products or sold regulated products other than in accordance with their product profile. Regulation of those advisers who choose the easy path could be reduced and made much cheaper and probably cheaper pi insurance too! Those who wish to sell in any other way can be targeted for a higher degree of scrutiny, higher pi premiums and can share in the compensation bill that their part of the market will attract. Product providers can pay for the regulation of their products (on a time cost basis ?) and include that cost within their product charges. Ongoing product regulation would ensure that the provider does not deviate from the agreed profile without some sort of notification.

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