I am writing to lodge a protest against the enormous Financial Services Compensation Scheme levy that advisers are being expected to pay.
I recognise that the public needs protection from unscrupulous selling practices, especially when these practices are by firms and companies which are regulated by the FSA.
However, it is the FSA that regulates financial services and it is the industry that is expected to fund the compensation when regulation goes wrong.
The injured parties that are warned that investments can fall as well as rise are then fully protected by perf-ectly innocent advisers.
My company has just been issued with an invoice for a huge levy representing over 25 per cent of this year’s profits. Not only do we have no control over the actions of rogue advisers but neither are we able to exert any influence over the escal-ation of fees and levies.
These rogue advisers are often made bankrupt by FSA fines or redress awarded by the Financial Ombudsman, a body that frequently has little understanding of investments.
I believe now is the time for IFAs and fund managers to stand together and refuse to pay this levy. These bull- ies cannot disenfranchise all advisers.
Full compensation in respect of Dartmoor preferred income shares was awarded by the financial ombuds-man eight years before the maturity date. The shares ultimately recovered virtually all their value, which is unsurprising since the compensation was awarded during a period of considerable financial crisis.
I have a client who was awarded full compensation, that is, cost plus interest, signed up to our discretionary management service at the same time and received a full recovery of the investment eight years later. Not bad for a few days’ disingenuous complaining.
In this instance, some fund managers of split-capital companies were found to be colluding in their dealings (known as the magic circle) and again the innocent advisers were expected to bear the cost.
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