Lowes Financial Management managing director Ian Lowes has hit out at Hargreaves Lansdown executive director Peter Hargreaves for blaming structured products for the increase in the Financial Services Compensation Scheme levy.
In an open letter to Hargreaves, Lowes says while he supports Hargreaves’ claim that the levy hike is unfair, he is wrong to cite structured products as the main cause.
Last month, the FSCS announced a £93m interim levy for advisers. The levy includes FSCS compensation costs of £86m, mainly to compensate Lifemark investors and management expenses of £7m. In addition, investment fund managers are to be billed £233m, meaning the total FSCS interim levy is £326m.
Hargreaves Lansdown was hit with a £3m bill earlier this month.
Lowes says: “The collapse of Keydata was not caused by structured products, rather it was precipitated by the secure income bonds and secure income plans, US life settlement schemes, which had no underlying defined measurement and so were not structured products.”
Hargreaves has attacked structured products on a number of occasions in the media.
Lowes says: “The returns achieved in 2010 by the type of structured/ defined investment utilised by many IFAs prove that those who discounted the sector out of hand may have served their clients better by taking a more open minded approach.”
Hargreaves Lansdown declined to comment.