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Life companies are split on extending IFA levy subsidy

Product providers are split over increasing their IFA subsidy for the Financial Services Compensation Scheme levy.

A first vote on extending the levy subsidy is understood to have been inconclusive as not all members responded.

This vote saw four major players support an increase, four vote against and four abstain.

A second letter has been sent to providers asking them to vote again on increasing this year&#39s subsidy.

Money Marketing under- stands that providers in favour of adding to the subsidy are Clerical Medical, Aegon, Norwich Union and Prudential.

GE Life abstained from the first vote while Legal & General is believed not to support an extension.

Standard Life, Royal London, Friends Provident, Scottish Widows, Axa, Skandia, Scottish Provident, Scottish Mutual, Liverpool Victoria and Canada Life would not confirm that they supported extending the subsidy.

Unum Provident does not want to extend the subsidy on the levy, as it does not feel that the brokers it works with are those that the subsidy supports.

In the past, the subsidy, which is due to end this year, has accounted for 85 per cent of the levy for investment firms. This year, it dropped to 15 per cent, causing extensive problems for IFAs, with some seeing levy increases of up to 1,000 per cent.

GE Life head of marketing David Lowe says: “It is not immediately clear that continuing the FSCS subsidy is the best way of supporting our principal line of distribution.”

ABI head of regulation and strategy Francis McGee says: “The overwhelming majority of IFAs have paid their levy and this had to be taken into account when thinking about how much providers may offer.”

Syndaxi Financial Planning director Robert Reid says: “It will be excellent if we have a solution for this year but the crucial point must be to sort this out for a longer time than the next 12 months, otherwise we are not solving the problem but merely deferring it.”

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