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Lee Robertson: Regulatory overload fails to curb FSCS levy hikes

I appreciate there have been many column inches dedicated to the subject of the Financial Services Compensation Scheme levy but here is my tuppence worth for what it may, or may not, add to the debate.

Every year we all sit waiting with trepidation to hear what the levy might be. We cannot anticipate it, we cannot plan for it and we certainly cannot even begin to frame a defence against the unfairness of it all.

Do not get me wrong here: I am not suggesting for one minute that the investing public should not be protected from poor advice, product design or downright criminality. What I am suggesting, however, is a little more thoughtful and perhaps informed behaviour is brought to bear from those that are regulated, as well as those that enforce the regulation.

Despite decades of online submissions, company visits and warnings we have still not seen much in the way of a reduction on this levy against the practices of the better firms to support the worst practices of the poor. Sadly, I suspect for most of us it has simply become a cost of doing business whether we like it or not, as we reach for the chequebook with heavy hearts or attempt to plan next year’s “governance reserve”. But surely all that management information collected by the regulator could have by now at least begun to build a picture of the firms and individuals most inclined to get involved in the latest teak rainforest or garage rent “sure bet” and offer them to an unsuspecting public? Otherwise, what is that data collected for? Is management information not designed to help manage, spot trends and lead to better outcomes?

What is more, surely considering those that have recently folded a company leaving liabilities before re-applying for permissions cannot be a hard metric to track? After all, we all have identifying company and personal regulatory numbers.

We all get that regulation is multi-faceted and difficult to enforce but doing better here should be a key objective. We appreciate the FCA is worried about inducements and due diligence among a host of other areas but this is a huge problem for us in the adviser community.

We understand there is a review of the funding of the levy but we really do hope it is taken seriously and will consider all options to ensure good is not continually squeezed to the detriment of the investing public.

I am sure we will all do our part and continue to bring poor behaviour to the attention of the regulator where we spot it.

For better relations, a little more effort is required in this key area of examining who has done what and who might be continuing to behave badly under a different guise. Coupled with the forthcoming review, this would help convince us all our concerns are being taken seriously.

Lee Robertson is chief executive of Investment Quorum



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. In other words, the FCA never examines the contents of the GABRIEL Returns, hence it fails so repeatedly to identify and avert looming train wrecks and motorway pile-ups, the consequences of which fall on the rest of us by way of ever-increasing FSCS levies.

    Regulation may well be multi-faceted but if the FCA could only get its act together and allocate its not insignificant resources in a proportionate and targeted manner (sounds familiar?), it shouldn’t be so terribly difficult ~ should it?

    As for bringing poor behaviours to the attention of the regulator, I’ve lost count of the number of times I’ve read a post from someone saying they’d done exactly this and the FSA did absolutely sod-all about it.

    As for “continuing to behave badly under a different guise”, presumably you’re referring to the practice of phoenixing which ought to be pretty easy to prevent but which, for some strange and unfathomable reason, the FCA says “would be very difficult”. I don’t buy this for a minute ~ it’s just a matter of checking the backgrounds of everyone applying for authorisation. How difficult can that be for Gawd’s sake?

    Hardly an original article, Mr Robertson. Everything you’ve written has already been said by many others many times already.

    • Julian, thanks for reading and responding. As I said lots of column inches or acres of woodland more likely already expended to this subject. Not very original but important nonetheless hence revisiting the inadequacies of the current approach from the regulator particularly around returns and phoenixing. I am aware that these are areas you regularly comment upon far more eloquently than I.

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