View more on these topics

Investment advisers to see 488% hike in FSCS levies

Investment advisers face a huge increase in Financial Services Compensation Scheme levies to £44m this year, up from just £9m last year.

The FSCS Plan and Budget 2009/10 says investment intermediaries may also face an additional interim levy of up to £40m in April because of the default of Pacific Continental Securities, meaning the increase could be 930 per cent.

Speaking to Money Marketing, FSA chief operating officer David Kenmir says most advice firms should expect to see an increase in FSCS levies this year.

He says: “Overall regulatory costs will increase because of the FSCS levy. In particular the main driver on the FSCS side in the intermediary market is the recent announcement about the probable levy to do with Pacific Continental.”

But life and pensions advisers will see their levy fall from £32m to £19m in 2009/10. This is due to a reducing number of mortgage endowments, pensions review and other life and pensions claims.

The FSCS expects to raise £186m in levies across all financial services firms, up from £130.8m in 2008/09.

The FSCS says banks and other deposit-taking firms will pay £435m in interest costs on loans to fund the five bank defaults that occurred in 2008/09.

These loans are being used to fund compensation for customers of Bradford & Bingley, Heritable Bank, Kaupthing Singer & Friedlander, Landsbanki Islands and London Scottish Bank.

The FSCS anticipates it will be dealing with increasing numbers of claims from bank defaults and payment protection insurance this year.

FSCS chief executive Loretta Minghella says: “2009/10 is again likely to be a very difficult year for consumers and firms alike. In such a context, we recognise the levy will not be welcome news for firms. Whilst our primary obligation is to deliver compensation to those entitled to our protection, we will be vigorously pursuing recoveries from the failed firms to help offset the costs of compensation for the levy payer.”

Recommended

Small IFAs want better provider support

Almost 90 per cent of small directly-regulated advisers feel unsupported by providers, according to a survey by IFA portal Panacea.

Use your loaf

The best thing since sliced bread is an expression I have never understood as I don’t rate sliced bread. For me, it is a half-baked expediency, an apology for the real thing – a bit like some thoughts on improving financial services.

Is three a crowd?

The pension versus Isa debate has raged on and off for years. Les Cameron, head of technical at Prudential, asks if three’s a crowd.   I think the debate was arguably settled by pensions freedom when the biggest downside of pensions – limited access and poor death benefits – was fundamentally changed. Total access, albeit with […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment