Last week, the Financial Services Compensation Scheme clarified that no final decision had yet been taken to issue the interim levy on the investment intermediation sub-class, although it hopes to do this by mid-March.
Aifa estimates that adviser firms will pay around £440 per adviser, with some firms paying several thousand pounds for the total £70m levy which also covers two stockbroker firms.
But it has emerged that Keydata was regulated by Imro before the FSA was established and contributed levies into the Investors Compensation Scheme alongside fund companies.
The FSCS argues that Keydata was not responsible for investment management, as this was outsourced to the investment vehicles SLS Capital and Lifemark, and so the £43m levy should fall on intermediaries rather than fund managers.
Industry consultant Mike Fenwick says: “For all of those secondary events there had to be an initial event and that was the decisions taken byKeydata over how investments once received were to be managed, and that is investment management. End of story as far as I am concerned.”
Aifa is continuing to lobby for a fairer settlement. Advisers will have to pay the interim levy within 30 days of notification although they can pay in instalments over a year through Premium Credit at an interest rate of 7.5-9 per cent, depending on trade body membership.
An FSCS spokeswoman says: “The way that past levies were allocated almost 10 years ago by the Investors’ Compensation Scheme has no bearing on the current allocation and position. The FSCS has to assess to which funding class it should properly allocate the costs of compensation according to the rules now set for it by the FSA.”
Ruth Whitehead Asssociates principal Ruth Whitehead says: “This certainly adds credence to the argument that the fund management sub-class should share some of the burden. We will shoulder our share but I do think IFAs are being dumped on while others get away with it.”